Qatari-backed investment fund Delta Two has abandoned its takeover bid for supermarket chain Sainsbury’s.

Delta Two, which initially approached the UK retailer in July with the £10.6 billion offer, has confirmed its withdrawal as a result of the global credit crunch.

Concerns over funding for the Sainsbury’s employee pension schemes also led to the move.

Shares in Sainsbury’s fell by nearly 19 per cent, close to £2 billion, in response to the news, leaving it with a market value of less than £8bn. but the retailer insists its future business prospects remain “attractive”.

In a Stock Exchange statement, Delta Two said its decision to pull out was due to concerns about the “deterioration of credit markets”, which made it more difficult and expensive to raise the debt needed to fund the transaction.

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