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An offer that Sainsbury can refuse

• Robert Peston
• 6 Mar 07, 08:20 AM

Not long now till we learn whether that for .

They鈥檝e been mulling long enough for J Sainsbury鈥檚 board to think about forcing their hand. It can do that by going to the Takeover Panel to request that the putative bidders 鈥減ut up or shut up鈥�, to use the City clich茅.

But the quartet will probably pre-empt that mild humiliation.

The stakes have been raised by the recent noisy debate about whether private equity is a good or bad thing.

The GMB鈥檚 attack on private equity has increased the reputational risks for CVC, TPG, Blackstone and KKR, the private-equity four, of engaging in a long and protracted public process (and the key word is 鈥減ublic鈥�) of trying to buy such a well-known retailing name with so many employees. That probably reduces the price they would be prepared to pay.

However the tilt at Sainsbury has taken on a significance even beyond the bald fact that it would be the UK鈥檚 biggest private-equity takeover.

It would be highly damaging for private equity鈥檚 long-term ability to invest its billions in the UK, if the quartet didn鈥檛 bid at all and allowed their trade-union critics to claim victory. The boards of public companies would question whether they really had the bottle for deals when the going gets tough and would be less minded to negotiate with them.

So here鈥檚 my prediction: the four will make a conditional bid, pitched at a level just below what the board of J Sainsbury would feel obliged to accept.

It will be an almost-serious bid, or one that protects private equity from the charge that it is running away with its tails between its legs.

In terms of price, that would put a conditional offer at nearer 拢5 per share than 拢6: not derisory, but not quite high enough to allow the quartet to feast on Sainsbury.

The honour (if that鈥檚 the right word) of private equity will however have been preserved. And another mega private-equity bid of another famous British business will come along before too long.

As an addendum, Permira looks to me to be the clever-clogs in this soap opera, having contemplated but resisted the urge to turn the Sainsbury private-equity quartet into a quintet.

Update 15:30 GMT: The has today ordered the private equity quartet to bid by April 13. Which is long enough for an almost-serious offer to be made and then politely rejected.

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