By Camilla Palladino
www.breakingviews.com
Investors in ailing UK supermarket chain
J Sainsbury seem to be hoping a private-equity bidder will ride to their rescue if new CEO Justin King fails to turn the business around as he has promised. But could such a bidder make the numbers stack up?
It's possible but it would be a big stretch. The major difficulty with Sainsbury is its size. The group's market capitalization is £4.6 billion, and any bidder would also have to assume £1.8 billion of net debt. Chuck in a 30% premium for the equity, and the group would cost £7.8 billion. That's a huge mouthful for any private-equity bidder.
What's more, it wouldn't be possible to gear Sainsbury right up to the eyeballs. The group might be able to borrow £3...
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