Crucial talks today between J Sainsbury and the Qatar-backed investment vehicle circling the number-three supermarket chain will aim to ascertain whether the firm can deliver a bid.
Sir Philip Hampton, Sainsbury's chairman, is due to meet Paul Taylor, who runs the Qataris' Delta Two Investment Fund, later today.
Hampton is expected to demand that the Qatari-backed investment fund increase its proposed 600p-a-share offer and change the structure of the bid, which values the third-biggest supermarket chain at £10.6 billion.
But many doubt that the Qataris' attempt to buy Sainsbury's will succeed, due to recent turmoil in the credit markets and continued opposition from members of the Sainsbury's family to a highly-leveraged bid.
Delta Two requires 75 per cent of shareholders to back the bid in order to put in place the leveraged financing it wants to use to buy Sainsbury's.
Shares in Sainsbury's have slipped in recent days amid concerns about whether a bid will actually materialise.
The Sainsbury's board is determined not to grant the Qataris access unless it is convinced that a formal bid will eventually materialise.
Delta Two is proposing a £4.6bn/£6bn equity/debt split to finance the deal. But Sainsbury's is arguing that £1.5bn of the equity, made up of payment-in-kind shares, should instead be classed as debt.
The trustees have written to Delta Two with worries about the levels of debt being considered. But the firm has responded saying it does not intend to start negotiations with the trustees until its bid is accepted in principle.
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