Aveneu Park, Starling, Australia

b) The top 5 shareholders are Qatar

b) Back in 1869, a young couple set up a small dairy shop in a small property they rented on London’s Drury Lane, no one could have predicted that this would go on to become a nationwide retailer, known to families right across the country. But this young couple were Mary Ann Staples, daughter of a dairy shop owner, and John James Sainsbury, son of a craftsman from Lambeth. Their first shop is said to have opened on 20th April 1869, the day they married. This was the beginning of  J Sainsbury plc. It is a public limited company so the share can be bought by public through the stock exchange. It is traded in the London Stock Exchange as SBRY. The top 5 shareholders are Qatar Holding LLC, Credit Suisse Group, Blackrock Inc., BRANDES Worldwide Holdings LP and MAJEDIE Asset Management. Qatar Holding LLC is a private equity firm specializing in strategic and direct investments in strategic private and public equity. It holds about 21.99% of the share in J Sainsbury plc, equivalent to 481,746,132 ordinary shares. On 16 April 2016, the Qatar sovereign wealth fund and private equity CVC have ended plans to launch a dramatic takeover approach for the UK supermarket group J Sainsbury (The Telegraph, 2016). It was understood that Qatar Investment Authority (QIA) to have joined forces with CVC Capital Partners and brought in Brookfield group, which is a Canadian property specialist to launch a takeover bid for the grocer. This was due to Sainsbury’s share that have fallen almost 25pc during the past two years which is a 12-year low last September. However, Sainsbury was able to struck a deal worth £1.4 billion to buy Argos owner, Home Retail Group. The Home Retail board announced that it would recommend to take the deal from Sainsbury, as this will benefit both companies from the significant cost savings and better range of products and faster delivery networks for customers. Qatar Holding initially invested in Sainsbury through a vehicle called Delta Two. It built up its shareholding through a serious transactions in 2007 before launching a takeover bid worth 600p, or £10.6 billion. This bid eventually failed but Qatar still retained a stake of 25.1pc. Here we can clearly see that Sainsbury experienced a type I agency problem. This is because, while Qatar Holding LLC planned on trying to takeover Sainsbury, the manager decided to struck a deal that can save the company and secure their job instead. It is understood that city grandee Archie Norman, who is currently chairman of ITV and made his reputation as chairman of Asda, was identified as a potential chairman of Sainsbury’s. By avoiding the takeover, the chairman of Sainsbury,  David Alan Tyler was able to stay in position. This was not the case for Qatar Holding LLC as they want to increase the share of J Sainsbury plc instead for the wealth of shareholder. From this scenario, the managers were the one that got the best outcome from the deal. This is totally different to a type II agency problem where there is a majority shareholder that has enough power to influence the decision. If that was the case, Qatar Holding LLC would have successfully proceed the takeover and achieve its objective.


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