Monday, 5 November 2007

Sainsbury's Bid dropped

It appears as if the Qatari-backed investment fund has abandoned its takeover bid for supermarket chain Sainsbury's. Delta Two, which approached the UK firm in July with the offer, said it was withdrawing the bid because of turmoil in global credit markets and also said that concerns about funding Sainsbury's employee pension schemes had led to the move.

The UK Takeover Panel had given Delta Two until Thursday to decide whether or not to press ahead with the bid. There were worries about how the bid, worth about £10.6 billion, would be funded, with Delta Two being urged by some Sainsbury's shareholders to stump up more cash. Speculation had grown in recent weeks that the Delta Two bid, backed by the foreign investment arm of the gas-rich gulf state Qatar, was in trouble.

In a statement to the Stock Exchange, Delta Two said its decision to pull out was due to concerns about the "deterioration of credit markets", which made it more difficult and expensive to raise the debt needed to fund the huge transaction. It also highlighted concerns about "arrangements for the future funding" of the firm's pension commitments. Shares in Sainsbury's, which had yet to back the offer, fell nearly 19% in response to the news.

Despite the bid's collapse, Delta Two still owns more than a quarter of Sainsbury's shares and must now decide what to do with them. Sainsbury's shares were down 19%, or 105 pence, at 450p in early trading in London. (source: Bloomberg & BBC News) - Sainsbury's takeover enters final stages, Sainsbury's Bid continues

The pay-TV and broadband group, Virgin Media formed last year from the merger of the former NTL/Telewest, whose hoped-for sale collapsed amid the global credit crunch, is expected to reveal a decline of about 31,000 customers in the third quarter, compared to a loss of 70,000 in the previous one. It will also stress to investors that a sale of the business will now not happen until next year at the earliest.

Virgin Media had hoped to shake up the home communications market by becoming the first “quadruple play” provider of pay-TV, broadband, fixed-line telephone and mobile services. However, the group struggled to fulfill its potential and in May found itself under attack from investors, including Franklin Mutual Advisers, over its management and strategy.

A turbulent period has since seen a proposed $10 billion (£4.8 billion) sale fall through and its chief executive, Steve Burch, replaced. The company has also become embroiled in a messy legal spat with BSkyB, the satellite broadcaster which is 39.1% owned by News Corporation.

Analysts at Citigroup are forecasting a decline of around 31,000 in the group’s customer base in the third quarter, followed by growth of around 45,000 customers in the fourth quarter. Instead of fighting for premium pay-TV customers, the group will unveil plans to focus on the cable operator’s broadband service as its core product for luring in customers.

However, the cable group is still facing fierce competition. Sky recently revealed that its broadband service had signed its one millionth customer just 14 months after launching the service. New players, including O2 , are also still entering the broadband market. (source: Timesonline) - Virgin Lost 40 000 customers

Virgin Active is understood to become a public company soon as Sir Richard Branson is planning to float his Virgin Active fitness centres in a move that could see the 167-strong chain valued at £1b billion. Virgin Active, which added 72 sites through its acquisition of Holmes Place a year ago, has begun a beauty parade of investment banks to carry out the initial public offering.

It is believed profits have doubled since the merger with Holmes Place. Private equity firms Permira and Bridgepoint Capital both have a minority stake in Virgin due to their previous ownership of Holmes Place, with Sir Richard maintaining the majority share in the listed company, understood to be more than 50%

The business with 85% currently owned by Sir Richard, has been highly successful the largest membership in South Africa, but Italy and Spain are also growing markets. Overall, the group has around 900 000 members. (source: The Independent & Metro)

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