The buyout groups and banks sizing up J Sainsbury could pay themselves record fees of more than £200m if they bag the UK's third-largest supermarket group.
Analysts have estimated that the consortium of CVC, Kohl-berg Kravis Roberts, Blackstone and Texas Pacific Group would have to offer around £11bn for the company to secure shareholder support for the deal.
Private equity firms typically pay themselves an "acquisition fee" of up to 1 per cent of total deal value on completion of a takeover. Blackstone, which last week agreed a $39bn (£20bn) takeover for Equity Office Properties, a record for a leveraged buyout, paid itself an acquisition fee of about $400m on the deal. Buyout firms sometimes reduce their fee on larger deals.
The biggest share of fees, however, often goes to the banks that arrange the loans that fund the takeovers. In the case of Sainsbury's, "it would not be unreasonable to expect them to pay £90m for the financing and another £40m in advisory fees, depending on the structure of the deal," said Chris Pedone of Freeman, a New York consultancy that tracks transaction fees.
The Transport and General Workers' Union is pressing ministers to open an inquiry into the possible takeover of Sainsbury's.Reuse content