Market Report: Sainsbury's is back in the bid spotlight

  • @LauraHChesters

Buyers are supposed to return to the market after the St Leger Day race at the weekend. But it looks like old bid rumours are also reappearing just in time.

Like groundhog day, rumours that the supermarket Sainsbury's could be the subject of a bid re-emerged yesterday. The shares reached a 52-week high of 338.5p during trading and closed up 5.4p to 337.5p as traders speculated that Qatar Investment Authority (QIA), which owns a 25.66 per cent stake, is reheating takeover plans. The shares have risen 11.52 per cent in the past year.

Qatar's interest surfaced in 2007 when the QIA-backed Delta Two fund launched a £10.6bn, 600p-a-share bid. The deal was chased away by the Sainsbury's family. The Qataris retained their stake and rumours returned in 2010 only to disappear again. This time, a 450p to 500p a share bid is doing the rounds.

Qatar has been on a buying spree, snapping up everything from Harrods department store to a £900m stake in BAA, via its subsidiary, Qatar Holding. But yesterday, some traders doubted its appetite for the third-largest supermarket, citing its involvement in the Glencore and Xstrata merger as enough to keep it busy for now.

Gossip mongers with a taste for bid speculation were watching National Grid. A share price rise of 7p to 685.5p was accompanied by talk it could be in the sights of US and European utility players.

The chit-chat on buyers circling software group Sage continued. A private-equity bid from KKR and Blackstone was rumoured, alongside interest from Germany's SAP. Sage continued its rise, up 1.8p to 317.1p.

Investors began to doubt the likelihood of BAE Systems and EADS merger plans to create the world's biggest aerospace and defence company. Fears that the deal could run into political or legal problems saw BAE shares slump 26.5p to 337.1p

Takeover speculation wasn't confined to the FTSE 100. After an incredible summer of sport, from the Olympics to Andy Murray's US Open win, eyes were back on sports bookie Sportingbet. City chatter resurfaced that a bidder could emerge as the online betting sector goes from strength to strength.

Mike Savage, partner at broker Killik & Co, rated it a buy and said it was an "increasingly attractive bid target". He said: "We suspect that the current share price advance is… attributable to a growing realisation of the true value of the fast-growing Australian business, which we reckon now exceeds Sportingbet's entire market cap."

Potential bidders put forward in the past month have included larger rivals Ladbrokes and Bwin.Party, and there have been rumours of overseas interest from Malaysian casino giant Genting and Indonesia's Sampoerna family.

Its shares have had a remarkable summer, shooting up from 26.25p in May and edged up again yesterday 0.25p to 43p.

One word of caution though: Sportingbet has been the subject of failed bids in the past.

The FTSE 100 jumped 37.84 points to 5,819.92 as the City predicted new US stimulus measures – QE3 – will be confirmed by Federal Reserve chairman Ben Bernanke after surprisingly bad August jobs figures across the pond.

The new entrants and leavers in the FTSE 100 have been confirmed with the changes taking effect from the start of trading on 24 September.

Engineer Melrose, down 0.8p to 255.5p, and energy services outfit John Wood Group, down 7p to 847p, will join the index, while broker Icap, down 0.4p to 338p, and fund manager Ashmore Group, down 6.8p to 321.3p, are demoted to the FTSE 250.

If recent merger activity comes to fruition and miner Xstrata leaves the FTSE 100, the reserve list cites London Stock Exchange Group, up 8p to 1,052p, as next in line to join the index.

The "put up or shut up" deadline for Carlyle's bid for defence contractor Chemring is today at 5pm and the City appears to doubt it appearing. Chemring's shares lost 2.4p to 327.5p.

Meanwhile, Essar Energy spurted up on news that it had got the go-ahead to pay a tax bill in India in instalments rather than one lump sum. The case, which has been rumbling on since 2008, ended up in India's supreme court. Essar's shares gushed up 6.6p to 114.7p.