Bestway snaps up £200m Sainsbury stake

Sainsbury’s shares soar after family-owned wholesaler Bestway snaps up huge chunk of grocer

Sainsbury’s shares soared after family-owned wholesaler Bestway snapped up a huge chunk of the grocer.

The UK’s second biggest supermarket said the Costcutter owner had bought a 3.45 per cent stake, worth around £200m.

Sainsbury’s shares jumped 5.5 per cent, or 13.1p, to 252.5p as the investment sparked chatter about a potential takeover.

Swoop: The UK’s second biggest supermarket said the Costcutter owner had bought a 3.45 per cent stake, worth around £200m

But Bestway said it is not planning to make a bid to buy the supermarket chain, founded in 1869 by John James and Mary Ann Sainsbury.

The wholesaler said it will hold the shares ‘for investment purposes’ and that it wants to support Sainsbury’s bosses.

Bestway added that it will consider building up a bigger stake in the FTSE 100 firm in the future. Sainsbury’s ownership has been the subject of speculation for some time and in 2021 there were even reports that it could be taken over by US private equity giant Apollo.

Bestway Group is the seventh largest family-owned business in the UK with turnover of approximately £4.5billion.

It was founded as a convenience store chain in London in 1963 by Pakistani entrepreneur Anwar Pervez and has since branched out into wholesaling, selling food, drink, cigarettes and household goods to 130,000 retailers.

The company has 28,000 employees, thousands of whom are in the UK, and around £400m in annual profits. Alongside its wholesale business, Bestway owns the UK’s third-largest pharmacy chain, Well Pharmacy, and more than 2,700 convenience stores under the Costcutter and Best-one brands.

AJ Bell investment director Russ Mould said the purchase came ‘out of the blue’ and a combination of the two companies makes sense.

He highlighted how Tesco thrived after its 2017 takeover of Bookers – the country’s biggest wholesaler – for £3.7billion.

Mould said: ‘As the UK’s largest independent cash and carry business, Bestway’s strategy is to be seen as a place where retailers, caterers and cafes can obtain all the stock they need at a good price.

‘If Sainsbury’s was part of the same group, both sides could benefit. In theory, Bestway could tap into the supermarket’s buying power and obtain stock at a lower price, thus making its proposition more appealing for its customers.’

But he cautioned that any attempt to make a full-blown bid would be tricky, with Bestway having to make a ‘convincing’ offer to Sainsbury’s existing major shareholders.

They include the Qatari Investment Authority with a 14.3 per cent stake and the secretive so-called ‘Czech sphinx’ Daniel Kretinsky, whose Vesa Equity Investment vehicle owns a tenth of the supermarket.

Sainsbury’s said in a statement last night that it would ‘engage with Bestway Group in line with our normal interactions with shareholders.’