The private equity group eyeing UK supermarket chain J. Sainsbury is "very likely" to walk away from the 10 billion pound ($19.7 billion) deal after the company's board rejected a bid of about 560 pence a share, a person familiar with the situation said on Saturday.
The private equity group led by CVC Capital Partners, which lost one of its four members on Thursday, first revealed it was mulling a takeover bid in February after shares in Sainsbury - Britain's third largest supermarket chain - began rising on market speculation there was an offer in the works.
They have gained about one-third since that speculation began, closing at 561 1/2 pence on Thursday. The source declined to say what turn of events would keep the negotiations alive.
Family shareholder David Sainsbury - who owns about 8 percent of the company and is its largest single investor - has said privately that he can't see any reason for the board to reveal detailed financial figures to the suitors unless they are prepared to offer at least 600 pence a share, another person close to the situation said.
A third source confirmed that price was proving a sticking point in the talks with the private equity group, as well as the group's proposed strategic plan for the supermarket chain. The consortium, which includes Blackstone Group and Texas Pacific Group, declined to comment. Sainsbury also would not comment on the situation.
The private equity bid of about 560 pence - according to sources familiar with the figure - was submitted on Thursday without the approval of the company's pension trustees, who were seeking assurances the prospective buyers would fund a deficit of as much as 1 billion pounds.