The board of J Sainsbury is expected to open its books to Delta Two today after months of fractious negotiations with the Qatari-backed fund over its £10.6 billion bid.

The decision effectively gives a recommendation to Delta’s 600p-a-share indicative offer, which could lead to a firm bid being put to shareholders within weeks.

Delta, which owns a 25 per cent stake in Sainsbury’s, is understood to have won the backing of the retailer’s board by adding £300 million more equity to its bid structure, short of initial calls for £1 billion.

But Delta’s long-fought battle to acquire Britain’s third-largest supermarket chain is still far from settled, given that the bidder has yet to hold talks with Sainsbury’s pension trustees or to gain the approval of its founding family shareholders.

Talks with the trustees, who are expected to demand as much as £2 billion in up-front cash payments to underpin retirement benefits, are expected to begin in the next few days. The Sainsbury family is understood to retain doubts about Delta’s bid but, in its statement today, the board is expected to give lengthy explanations justifying its decision to allow Delta to carry out due diligence. The board is keen to satisfy the fears of the supermarket’s founding family, pension trustees and competition regulators who have expressed concern that Sainsbury’s would not be able to compete effectively if it was too highly geared.

To allay those fears, Delta Two has changed the structure of its bid to include £3.2 billion of equity, £100 million more than before, and £1.3 billion of preferential shares guaranteed by the state of Qatar, £800 million more than previously offered. The payment in kind (PIK) finance element – a long-term form of finance that is counted as equity – has been reduced from £1 billion to £400 million. The deal is also funded by nearly £5.7 billion of debt.

Sir Philip Hampton, Sainsbury’s chairman, is understood to be prepared to recommend the offer without the backing of the family. However, with a requirement to obtain 75 per cent approval from shareholders for the deal to go through, there is a strong risk that a bid could fail without the support of the family, which controls 18 per cent of the shares.

The family blocked an earlier bid from CVC Capital, the private equity firm, saying it undervalued the group and was too highly leveraged. This time the board is likely to have support of more independent shareholders including Robert Tchenguiz, the property entrepreneur who controls a 10 per cent stake and is said to be keen to see a deal completed at 600p.

Sainsbury’s shares have dropped 8 per cent in the past two months on fears that Delta’s bid might collapse, given the current credit squeeze.

However, the fund has supplied letters from its debt providers, ABN Amro, Credit Suisse and Dresdner Kleinwort confirming that its financing is in place. Delta Two tabled its indicative offer in July, about a month after it secured a quarter of Sainsbury’s stock. The supermarket has been the subject of bid speculation since February when The Times revealed CVC’s plans for a takeover.

Analysts believe that rival supermarkets including Tesco and Asda may now try to register interest in bidding for Sainsbury’s simply to test the regulatory environment and to get a glimpse of their rival’s books.

If Delta Two’s bid collapses, the supermarket will be left in the hands of three powerful investors with potentially conflicting plans for it.

Shares in Sainsbury’s rose 3½p to 554p yesterday as investors began to hope that a deal would finally emerge.

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