Sainsbury's denies rumours Home Retail bid could be blocked by Qataris

Sainsbury’s has come out to deflect rumours that major shareholder may block the supermarket's attempt to acquire Home Retail Group.

The Qatari Investment Authority, which holds a huge 25.1% stake in Sainsbury’s, was reported to have expressed unease about its £1bn bid for the Argos and Homebase owner, according to sources cited by the Guardian.

But Sainsbury's issued a statement late on Thursday saying: "We understand that the QIA is not the source of the Guardian story and has not taken any position on the proposed Home Retail Group transaction. Like any other shareholder the QIA would consider any such proposal in detail before making a decision on its position."

The FTSE 100 grocer had revealed on Tuesday that it was considering returning to the negotiating table after a November cash-and-shares approach for Home Retail was rejected.

If the grocer does follow through with a takeover it will need to issue a large chunk of new equity that would force the Qatari state investment firm to contribute significantly if it wants to keep its stake at 25%.

Sainsbury’s has until 2 February to consider whether it will make a new offer or walk away, with some analysts supporting the latter idea.

Shares in Sainsbury's continued their fall from Tuesday, down 1.85% at 236.7p by 0818 GMT on Thursday, while Home Retail's price was 1.6% lower at 130.3p.