Leighton to back King at Sainsbury's

Allan Leighton, who ignited speculation that he could bid for J Sainsbury when he resigned three board directorships last week, is expected to ask Justin King to stay on in the event that he proceeds with a takeover offer for the struggling supermarket chain.

Mr King, who took over as the chief executive of Sainsbury's in March, is likely to be given extra time to pursue his turnaround strategy even if a private equity consortium fronted by Mr Leighton tables a bid. The two men are old friends from their time at the food giant Mars, where both began their careers. Mr King later followed Mr Leighton to Asda, forming part of the ex-Mars coterie that helped to turn around Asda. Even now, Mr King regularly turns to Mr Leighton for advice - and also to Archie Norman, another ex-Asda colleague.

Although Sainsbury's has yet to receive any takeover approaches, the group has already started bolstering its possible defences. It is poised to appoint Morgan Stanley, which helped Marks & Spencer fight off Philip Green's £9.1bn advances this year, as a corporate adviser.

Bankers believe that Mr Leighton is mulling plans that at the very least could see him take an equity stake in Sainsbury's in return for trouble-shooting at the group.

Another possibility is that Mr Leighton could help Galen Weston, the Canadian billionaire owner of Loblaw, the food giant, table a bid for Sainsbury's. Last week Mr Leighton justified his decision to resign posts at lastminute.com, Dyson and Cannons, by saying it would give him more time to spend in the US and Canada on Mr Weston's behalf. Mr Leighton is on the board of Selfridges, which Mr Weston owns.

Despite the massive takeover premium inflating Sainsbury's shares - they trade at 30 times next year's earnings, which is double the sector average - potential bidders were warned they would need to bid even more to stand any chance of persuading the eponymous family to sell up.

One of biggest family shareholders believes the shares are undervalued at their current level. Andrew Cahn, a trustee of the Gatsby Charitable Trust, the largest Sainsbury family charity, used to sell up to 300,000 shares a year. But he has halted the disposal programme "because of the depressed share price", he was reported as saying.