The Qatar-based investment fund Delta Two tabled a preliminary offer of £10.44 billion for J Sainsbury yesterday, reigniting a battle over the future of Britain’s third-largest supermarket group.

Shares in Sainsbury’s rose 5p to 590½p after the grocer said that it had received its second takeover approach in six months, after a failed bid attempt by CVC Capital, the private equity firm.

Sources said that Delta Two, a fund backed by the Qatar Investment Authority, sent a letter yesterday to the board of Sainsbury’s outlining a 600p-a-share offer. They said that the board was due to meet in the next two days to discuss the offer and decide whether or not to open its books for due diligence.

It is understood that the bid will be funded using £3.6 billion of cash, a £1 billion payment-in-kind loan and £7.8 billion of debt, including Sainsbury’s existing £1.8 billion borrowings.

The debt has been underwritten by Delta Two’s advisory banks Dresdner Kleinwort, Credit Suisse and ABN Amro, sources said. Including the debt, the offer values Sainsbury’s at £12.2 billion.

Sources said that the group would seek to invest about £3 billion to help Sainsbury’s to expand overseas, using the Qatari Royal Family’s influence in regions across the Middle East, South Korea and China. They added that the group had no plans to sell any of Sainsbury’s lucrative property portfolio.

Last week Delta Two, which has been building a stake in the supermarket group and now owns a 25 per cent holding, flew key members of the Sainsbury family to Sardinia to discuss its proposals. However, sources said that the family, which blocked CVC’s takeover bid, are understood to be reluctant to accept a highly leveraged offer.

The other key player is Robert Tchenguiz, the property entrepreneur, who controls about 10 per cent of the supermarket. He said yesterday that Sainsbury’s board now had only two options – to accept the Qataris’ offer, or to implement his plan to split the business into separately listed property and operating companies.

“Doing nothing is no longer on the agenda,” a spokesman said. It is understood that Mr Tchenguiz and Delta Two are not working in concert.

In a statement, Paul Taylor, whose company Three Delta advises the Delta Two fund, said that the Qatari investment group was interested in “long-term investments in exceptional businesses, principally in the UK, which have strong incumbent management teams, leading market positions and long-term growth opportunities.

“Three Delta has a high regard for the board, management and employees of Sainsbury and is supportive of the company’s operational strategy.”

It is understood that Delta Two has yet to meet Sainsbury’s pension fund trustees. However, John Adshead, the chairman of the trustees, is likely to demand at least £1 billion to shore up the fund in the event of a collapse of the business.

While it is possible that CVC, or another private equity firm, could reenter the race for Sainsbury’s, it is thought unlikely that any would chose to do so. Sources reiterated yesterday that CVC did not see value in the supermarket group at the 600p-a-share level.

It would also be much harder for the buyout firm this time around, given that the Qataris now have a 25 per cent blocking stake.

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