J Sainsbury was today the subject of renewed takeover speculation after Delta Two, the Qatari investment fund, paid £732 million to acquire a further 123 million shares in Britain's third largest supermarket group, taking its overall holding to 25 per cent.

Shares in Sainsbury's climbed to an all-time high of 594p when its stock rose 5.13 per cent, or 29p, in early trading.

Delta Two paid 595p per share for a 7.07 per cent stake in Sainsbury's, consolidating its position as the retailer's largest investor which previously held a 17.4 per cent share in the company. With a 25 per cent stake, Delta Two now holds more shares in the supermarket group than the Sainsbury's family, which owns a combined holding of about 18 per cent.

There were mixed suggestions today as to who Delta Two had acquired its new shareholding from, with some observers pointing to Brandes, the powerful US fund manager and holder of 8.06 per cent share in Sainsbury's, just ahead of Lord Sainsbury of Turville who owns 7.73 per cent of the supermarket group.

Background

• Asda acknowledges cost of price war

• Bankers feel pinch as QIA ditch Sainsbury’s

• King’s rallying cry as managers count cost

• Qatari group poised to walk away from Sainsbury’s

• Small business 'dismay' at supermarket probe

Multimedia

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Robert Tchenguiz bruised but unbowed

The entrepreneur is nursing a £174m loss after the failure of a Qatari-backed bid for Sainsbury

Background

• Report claims grocery monopoly is impossible

• Sainsbury’s suitor ranked second-worst in survey

• US to press for sovereign wealth funds restrictions

• Sainsbury’s chief eager to stay after takeover

• UK supermarkets accused of price-fixing

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The Qatari fund is run by Paul Taylor, a former associate of Robert Tchenguiz, the property tycoon who is a 5 per cent shareholder in Sainsbury's. Together, Delta Two and Mr Tchenguiz own 30 per cent in Sainsbury's which, if they teamed up, would trigger an automatic offer for the company. Sources close to Mr Tchenguiz declined to comment on whether he and Delta Two had been in talks regarding Sainsbury's.

Mr Tchenguiz has steadily built up a holding in the supermarket group and has met with the management to persuade it to split out its property portfolio, worth £8.6 billion, and return the proceeds to investors. However, last month the management made it clear it had no intention of changing its capital structure by hiving off its property into a separate vehicle.

Also, if Delta Two is planning to make a bid for Sainsbury's, it will have to offer 600p or more for the company after Lord Sainsbury of Turville, the former science minister and the family's largest individual shareholder, indicated that the supermarket group would not open its books for anything less.

A CVC-led group of private equity firms made an approach to Sainsbury's earlier this year, and raised its indicative price to 582p per share before the deal collapsed.

Delta Two's morning raid today follows reports earlier this week that the fund had been approaching institutional shareholders, offering to pay up to 610p a share to buy out their equity.

Brandes was unavailable for comment.

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