Though it went closer to the wire than I thought, I always felt the Sainsbury's consortium bid was a non-starter. It would take, say, a £150m price-cutting programme by Tesco to derail Sainsbury's profits, which are only just starting to recover. On a sensitivity analysis, how would property investors feel if a highly leveraged business saw profits falling? While Tesco has been able to negotiate 4.5% rates on cashback deals, you'd want 5.25% on such a highly leveraged business, at least. Hardly conducive to lifting profit. Then there was the operational business plan. The consortium paid lipservice to non-food and store extensions, but Justin King's plans in that regard appeared every bit as aggressive. Using the same CEO, and the same plan, it came down to financial re-engineering: piling on debt. The spin from the consortium has been of the "loony lords" vetoing the deal. But to get the pension fund on board required sums that would have wrecked the consortium's business model. And getting 75% shareholder agreement cuts tax, but only with the family's blessing. The consortium assumed that if David Sainsbury was prepared to sell some shares at £4, he'd cough up the lot at 3% shy of £6. But it's a different decision if in doing so you see the structure of your business change so fundamentally. The dark horse in all this is Robert Tchenguiz, who's quietly built a 5%+ stake. His instinct - based on what he's done at Laurel Pub Co and Mitchells & Butlers - would surely be to do to Sainsbury's, broadly speaking, what the consortium was planning: splitting the business into so-called op-cos and prop-cos and leveraging up the op-co through sale and leasebacks. It would be interesting to be a fly on the Sainsbury's boardroom wall as he proposes this.

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