Sainsbury's saw its shares tank to lowest level since 2003
Sainsbury's saw its shares tank to lowest level since 2003Reuters

With Sainsbury's share price trading at its lowest level since 2003 following its third sales decline in a row, could another takeover bid from the Qatar Investment Authority be on the cards?

Rumours of a bid from the direction of the QIA, which is Sainsbury's biggest investor, resurfaced in July of this year.

The Qataris, who own a 26% stake in Sainsbury's, made a failed bid for the retailer back in 2007.

The additional Sainsbury's share ownership is split between the family, with around 14%, and other long-term institutional investors who own the remainder.

Marc Kimsey, senior trader at Accendo Markets, told IBTimes UK: "Since the breakdown of the 600p deal back in 2007 the takeover story has resurfaced with almost every notable drop in Sainsbury's share price, the financial press citing a 'cheaper deal'.

"This rationale carries more weight than before with the price trading at its lowest level since 2003 and although the supermarket landscape has changed significantly since then, so too has the value of Sainsbury's property portfolio, estimated at some £14bn, providing the company with robust backing."

Some city commentators have said Sainsbury's would benefit from a change of status, which would allow management to be both more strategic and flexible against the challenging market backdrop.

There were also rumours that the Qataris were underwhelmed with Mike Coupe's appointment as chief executive to succeed Justin King, who was credited with turning the group around during an impressive 10-year tenure.

Richard Hunter, head of equities at Hargreaves Lansdown, told IBTimes UK: "There is nothing to suggest that Qatar Holdings are currently considering adding to their 26% holding.

"In the meantime, the balancing effect of this on the stock could be construed as either positive (should QH move to a full bid) or negative (should QH choose to exit their position entirely, thus overhanging the shares)."

In addition to price wars with Asda and Tesco and a full frontal assault from the likes of Aldi and Lidl, Sainsbury's is negotiating a migration to online shopping as well as convenience stores. It opened of 23 "local" stores in the last quarter and has also expanded its "brand match" policy.

The supermarket promised that a detailed strategic update is forthcoming and while its dividend remains intact.

Speculation about a takeover bid in summer saw Sainsbury's share value jump 4%.

With over £100bn at their disposal, the Qataris are known to have a limitless appetite for UK property, among other investments, and are understood to be keen on unlocking value from Sainsury's property portfolio.

The original takeover plan, which was dropped back in 2007 thanks to the credit crunch and resistance from the Sainsbury's family office, involved expanding the brand overseas, opening stores in the Middle East, Korea and China, where the Qatar government has strong links.

Nick Bubb, a retail analyst at Zeus Capital, told IBTimes UK: "It's been a pretty awful investment for them over the last six years, more than halving in value, and it's unlikely that they will want to throw good money after bad, although speculation to the contrary is inevitable."