Deal collapse leaves Tchenguiz with huge loss

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The Independent Online

Robert Tchenguiz will seek a meeting with J Sainsbury executives to discuss ways to wring value out of the supermarket giant's property portfolio after being left with an estimated loss of £175m on his 10 per cent holding in the company. .

The Iranian property tycoon was left nursing the massive loss after the announcement that suitor Delta Two pulled its proposed £10.6bn bid sent the company's shares into freefall. Sources close to Mr Tchenguiz said he will "wait for the dust to settle" before reigniting his campaign to convince the company to spin its massive property portfolio into a separate entity or gear it up beyond the current level. He is understood to believe that by taking full advantage of the value tied up in its real estate assets, the company could be worth £7 per share.

Mr Tchenguiz borrowed most of the nearly £1bn he spent on shares, bought at prices between 525p and 590p. The company's share ended the day down 21 per cent at 440p yesterday.

Indeed, it was not a good day to be Robert Tchenguiz, as several other of his investments also faired poorly. Mitchells & Butlers, owner of the All Bar One pub chain in which he also has a large holding, shed 4 per cent of its value yesterday, bringing its total loss in value to 30 per cent since July. That drop comes on top of the cancellation in August of a proposed £4.5bn joint property venture that he had proposed due to market conditions. Meanwhile SCi Entertainment, in which Mr Tchenguiz owns a 15 per cent stake, took a 9.2 per cent nosedive yesterday, bring it cumulative loss since July to nearly 40 percent.

The most problematic investment, however, is Sainsbury. "He's a very smart guy, but he has taken some very big bets," said an investor who has dealt with Mr Tchenguiz. "Now his credibility is at stake. When you come out so publicly as an activist in a stock, you can't just sell the next day. He's going to stick in there and push the real estate side. He has to if he wants there to be any credibility to his activism next time he tries to do something."