Sainsbury’s shares surged after reports that a private equity giant is running the rule over the company to assess the potential for a takeover move.
The UK’s second largest supermarket chain saw shares leap more than 12% at the start of trading on Monday.
They continued to rise, closing the day up 15.4%, or 45.3p at 340p, with several hedge funds thought to have closed their short positions – betting the share price would fall.
This came after the Sunday Times reported that US private equity firm Apollo Global Management has shown an “exploratory” interest in Sainsbury’s.
Both Apollo and Sainsbury’s have declined to comment.
Shareholders were sent into a frenzy by the report but it is understood that Apollo’s takeover interest is primarily elsewhere in the UK supermarket sector.
Apollo remains in talks with a consortium led by private equity rival Fortress to potentially join the group’s takeover offer for Morrisons, for the UK’s fourth largest grocer.
The Fortress-led consortium had been in the driving seat to buy Morrisons for £6.7 billion until rival bidder Clayton, Dubilier & Rice (CD&R) laid a £7 billion offer on Thursday evening.
Takeover interest in Morrisons from private equity had already helped to buoy share valuations across UK supermarket chains in recent months.
Sainsbury’s shares had also been heavily shorted earlier this year and the lift in value has been boosted by a number of exits by shorting investors.
Apollo also recently targeted a takeover of another rival, taking part in the auction process to buy Leeds-based Asda, before it was bought by the Issa Brothers and private equity backers TDR Capital.