The Qatari-backed investment fund that has been circling Sainsbury’s since the summer has today been issued an ultimatum - bid for the chain by November 8, or walk away.

The decree came from the takeover panel, following indications the Qataris Delta Two fund is struggling to secure financing. The fund informed Sainsbury’s last night that it needed to raise an additional £500 million of equity finance, and that there was no certainty in this being achieved. The revelation prompted the panel to allow Delta Two just under a fortnight to complete its deal.

Under the ultimatum, Delta Two, which already owns 25 per cent of Sainsbury’s shares, must either announce a firm offer or withdraw from the bidding.

Delta Two is now appealing to the Qatar Investment Authority, estimated to have assets worth $50 billion (£24bn), for additional funding to finance its proposed £10.6bn offer.

Since Delta Two began due diligence on Sainsbury’s in September, retail trading conditions have deteriorated and the financial market has remained tough.

It was thought the Sainsbury family, which has an 18 per cent stake in the chain, would not back Delta Two unless the investment fund reached agreement with the pension fund trustees.

However, it now appears this is just one of a number of factors adding to Delta Two’s need for extra financing. A Sainsbury’s spokesman was quoted in The Times, saying that talks with the trustees were “progressing constructively but not yet completed”.

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