LXi REIT’s £500m bid for Sainsbury’s stores collapses amid market volatility

LXi REIT’s proposed takeover of 18 Sainsbury’s stores has collapsed after the group pulled out of a share issue.

This was expected to part-fund the £500m-plus deal, but the real estate investment group did not go ahead with its plans for a sale and leaseback arrangement due to current stock market volatility.

Sainsbury’s has confirmed it is no longer in discussions to sell these stores to LXi REIT and this would have no impact on its financial guidance.

In a statement to the London Stock Exchange, the Big Four supermarket further revealed its plans to buy 21 new stores over the next two years would go ahead as planned.

The FTSE 100 company believed it would complete the expansion bid in the first half of the financial year to March 2024, and that it had other options for funding the deals.

It said: “We stated on 21 September  that if the LXi transaction were to proceed, the cash received from this transaction would have been used to part-fund the purchase of 21 freehold Sainsbury’s supermarkets from the Highbury and Dragon portfolios.”

Last week, the retailer did not make public a price but confirmed a deal would be finalised in the first half of its financial year to March 2024.

“Given the strength of the Sainsbury’s balance sheet and property portfolio, we have a wide variety of alternative options to finance this transaction,” the supermarket stated on Monday.

Both LXi REIT and Sainsbury’s share prices were relatively flat in afternoon trading on Monday.