Sainsbury’s has today noted that Bestway Group has acquired a 3.45% stake in the supermarket chain but has stated it has no intention to launch a bid.

Bestway Group, which offers a cash and carry business, said intends to hold its shares for investment purposes and looks forward to supporting the executive management team.

It said it may look to make further market purchases of Sainsbury’s shares from time to time, subject to availability and price.

Based on Sainsbury’s share price at close on Thursday of 239.4p, the acquisition would be valued at around £193.4m.

Under takeover rules Bestway Group is prohibited from announcing an offer for Sainsbury’s for six months.

In a statement this morning, Sainsbury’s said: “J Sainsbury PLC received notification after market close on 26 January 2023 that Bestway Group has acquired or agreed to acquire shares representing a 3.45% shareholding in J Sainsbury plc.

“We note the announcement made this morning by Bestway Group stating that it is not considering an offer for the company.

“We will engage with Bestway Group in line with our normal interactions with shareholders.”

Beginning as a chain of convenience stores in 1963, Bestway has grown into the 7th largest family-owned business in the UK with turnover of approximately £4.5bn

It is now a diversified multinational business with interests across the wholesale, pharmacy, real estate, cement and banking sectors.

It serves over 12 million customers and employs over 28,000 individuals across the UK, Pakistan and the Middle East.

Market reaction

John Moore, senior investment manager at RBC Brewin Dolphin, said: “Bestway buying a c5% stake in Sainsbury’s is another indicator that UK shares are cheap – particularly in the retail sector, which has somewhat of a dark cloud hanging over it.

“While it looks unlikely the company will make an offer, the deal will put a cat among the pigeons and remind stock market-focused investors that trade values for assets may be much higher.

“Sainsbury’s is one of the least favoured FTSE 100 stocks among analysts, according to our research, and the fact that it has been the target of investment from another sector player could spark a flurry of activity around the company and more widely.”