Sainsbury's rises as Costcutter owner Bestway takes 3.45% stake

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Sainsbury's rises as Costcutter owner Bestway takes 3.45% stake
Credit: © Reuters.

By Geoffrey Smith -- Shares in Sainsbury's (LON: SBRY ) hit a nine-month high after the privately held group Bestway said it had accumulated a 3.45% stake in the group.

By 06:00 ET (11:00 GMT), Sainsbury's stock in London was up 4.1%, the best-performing stock in the FTSE 100 . The shares are now up nearly 15% this year.

Bestway said it doesn't intend to make an offer for the group, which has no major shareholders capable of blocking any such move and will support the current management team.

However, it did say that it "may look to make further market purchases of Sainsbury's shares from time to time, subject to availability and price."

The announcement creates something of a structural demand overhang for the stock, given Bestway's intention to be a long-term shareholder.

Bestway's move comes after a Christmas season in which the U.K.'s major supermarkets managed to raise their sales broadly in line with inflation, although grocery performed much more strongly than other product lines. Sainsbury's Argos unit, which concentrates on longer lasting consumer goods, saw sales fall, while food and drink sales rose by over 12%.

Bestway, owned by the Conservative peer Lord Choudrey, is already one of the largest grocery wholesalers in the U.K. Its investment puts it in a position where it may be able to push a closer cooperation between its operations and Sainsbury's in future.

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