Sainsbury boss Justin King took advantage of the supermarkets group's two-month share price high this morning by selling shares the day after rumours that the Qatar Investment Authority is considering a bid.
King sold part of his existing shareholding as well as exercising and immediately selling shares under the company's long-term incentive plan.
The highest price reached this morning was just over 348p. King managed to sell 300,000 shares at 346p each thereby netting himself just over £1m.
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He also exercised 172,446 long-term incentive shares and sold them for 343.89p each. This raised £593,000.
The Qatar Investment Authority owns 26% of Sainsbury and it is thought to be considering increasing this to 29.9% before launching a 500p a share bid.
The share price has not been that high since a £10.5bn 600p a share bid from the QIA collapsed in November 2007 following issues with the pension fund and debt.
Since 2007, sterling has depreciated by 25% against the dollar, making UK assets more attractive to an overseas buyer, according to Jonathan Jackson at Killik Capital.
Britain's third largest supermarket said like for like sales excluding petrol increased by 1.1% during the 12 weeks to 12 June. The online business hit new records, growing just under 20%, while the retailer now ranks as Britain's fastest growing DVD retailer.
The consensus profit forecast for the year to March 2011 is £656m.
The pension fund deficit nearly trebled to £1.23bn on 21 March 2010 and Sainsbury has agreed a package with the pension fund trustees that should significantly reduce the deficit. The funding plan should be cash neutral over the next five years.
Net debt fell by £122m to £1.55bn last year. However, charles Stanley estimates off-balance sheet debt of around £7bn, relating to operating leases on stores.
Top Director Buys
Connaught (CNT) Director name: Mr Robert H AlcockAmount purchased: 20,000 @ 112.50p Value: £22,500
Top Director Sells
Sainsbury (J) (SBRY) Director name: Mr Justin KingAmount sold: 300,000 @ 346.00p Value: £1,038,000
Sainsbury (J) (SBRY) Director name: Mr Justin KingAmount sold: 172,446 @ 343.89p Value: £593,025
Chariot Oil & Gas (CHAR) Director name: Mr Adonis PouroulisAmount sold: 500,000 @ 115.30p Value: £576,500
Noble Investments (NBL) Director name: Mr Jasper AllenAmount sold: 103,057 @ 85.00p Value: £87,598
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