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Sun 22 Jul 2007 11:08 AM

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Delta Two faces union blues over J Sainsbury bid

Qatari investment fund faces opposition over its planned takeover of the UK 'national icon' supermarket chain.

Qatar's Delta Two investment fund is facing unexpected opposition over its planned takeover of UK supermarket chain J Sainsbury.

A leading figure at one of the UK's most powerful unions, the Transport and General Workers' Union (T&G), has urged the British Government to block the deal, arguing that it would make the chain less competitive, and would lead to higher prices.

"How on earth can it be in Britain's interest to allow Sainsbury's to become the nationalised property of a Gulf state?" Brian Revell, the T&G's representative on food and agriculture, told union members.

J Sainsbury is the UK's third-largest supermarket chain, and controls 18% of the nation's food supply. The T&G, which has more than 20,000 members in Sainsbury's stores and distribution centres across the country, is arguing that Delta Two should not be allowed to take control because the store group is a national icon.

"It is probable that the new owners will seek to split the property from the retail business," Revell added. "This will lead to higher prices and a less competitive Sainsbury's."

The comments from the T&G come as Sainsbury's board considers a $21.4 billion approach from Delta Two, which already owns 25% of the supermarket. Industry sources have suggested that the fund intends to invest $3 billion in the chain, although concerted union opposition may force the UK Government to intercede.

The T&G is already threatening UK carrier BA with strike action over job cuts at Heathrow airport - and this just six months after BA averted a strike by T&G affiliated cabin crew with a last-minute agreement on pay, but too late to avoid disruption that cost the airline an estimated $780 million in lost bookings.

Another strike, this time in the food supply sector, would cause further serious disruption and undoubtedly taint the early days of Prime Minister Gordon Brown's leadership.

If the deal goes through, Delta Two is expected to appoint retail veteran Tony Campbell - known for helping to revive the fortunes of UK supermarket chain Asda - as chairman of J Sainsbury, while retaining the services of Justin King as chief executive, according to the Sunday Times.

According to the report, the firm’s move to arrange a high-powered board with retail experience will help Delta Two counter criticism that it knows nothing about retail.

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