Sainsbury's staff miss out on £200m as CVC bid falters

Employees at J Sainsbury look set to miss out a £200m windfall due to the likely collapse of a £10bn bid for the group from a consortium led by the private equity house CVC Capital.

Details of plans to offer as many as 80,000 staff an equity stake in Sainsbury's, worth around 15 per cent of the business, emerged as CVC prepared to walk away from the supermarket chain, as its offer is likely to be rejected by the company's board.

Under the terms of the proposed deal, employees with a certain amount of service at the company would have been eligible to purchase shares in the supermarket group for a nominal fee, which would have led to a bumper payout when the consortium sold, refinanced or floated Sainsbury's at a later date.

It is also understood that, as part of its long-term strategy for Sainsbury's, CVC planned to create around 16,000 jobs at the group across the country, which would have gone some way to addressing union concerns that private equity is all about slashing costs via job cuts.

However, the CVC consortium, which includes Texas Pacific and Blackstone, is likely to walk away if, as expected, its 560p-a-share bid for the supermarket chain, tabled on Thursday, is rejected by the board this week.

Lord Sainsbury, the former science minister and the largest shareholder in the group with a voting stake of just under 9 per cent, has urged the board to reject the "inadequate" offer and stressed it should not even consider opening the books to any proposal below 600p a share. The Sainsbury family controls just under 18 per cent of the company.

KKR was part of the bidding consortium, but is understood to have withdrawn from the bid for Sainsbury's because it was nervous about the possible price the consortium was likely to have to pay. CVC and its partners are now likely to follow suit, as they believe their offer was a fair price.

Sainsbury's is understood to be considering a review of the company's property assets if the bid fails.

One option would be a complete separation of the property business, a plan which is favoured by the property tycoon Robert Tchenguiz, who owns a 5 per cent stake in the company and is said to be opposed to a bid going ahead. It is thought that the retailer's freehold property could be worth as much as £10bn.