Qatari investment fund Delta Two has ditched a takeover bid for British supermarket group J Sainsbury worth £10.6 billion sterling, citing poor global credit markets and a wrangle over pensions.
Delta Two, an investment fund backed by the Gulf state of Qatar, has decided to terminate its bid, which was worth the equivalent of €15.7 billion.
'Delta Two has concluded that it is not in the best interests of stakeholders to proceed with an offer for Sainsbury and has informed the board of Sainsbury of this decision,' the group said in an official statement.
The news sent Sainsbury's share price plunging in London, where it ended down more than 20% at 442p.
The Qatari bid fell victim to an ongoing global credit squeeze that has been sparked by a crisis in the sub-prime or high-risk housing sector in the US. Analysts say that the troubled US housing market has led banks worldwide to curb the availability of credit to companies - which makes it difficult for bidders to finance an acquisition.
Delta Two had proposed its takeover bid for Britain's third-biggest supermarket operator last July. This week, however, it faced a Thursday deadline to declare a formal offer.
Delta Two, which owns 25% of Sainsbury, added that it remained 'fully supportive' of the group's management.
Earlier this year, J Sainsbury had snubbed a consortium takeover bid, said to be worth about £10.1 billion, from private equity groups Blackstone, CVC and Texas Pacific Group.
The supermarket chain is the third-largest Britain after sector leader Tesco and number two Asda, which is owned by US giant Wal-Mart. Sainsbury employs 148,000 staff and has 788 supermarket branches across the UK.
