Last month, private equity firms CVC Capital Partners, Kohlberg Kravis Roberts and The Blackstone Group admitted they were at the "preliminary stages of assessing Sainsbury's".
However, yesterday the Takeover Panel said in a statement: “Following discussions with both parties' advisers, the panel has ruled that the consortium must, by 5pm on 13 April 2007, either announce a firm intention to make an offer for Sainsbury or announce that it does not intend to make an offer.”
Richard Ratner, an analyst at Seymour Pierce, said he did not believe the consortium would pay more than 550p a share for Sainsbury's.
“While we are unaware as to whether the bid will go ahead, given where the share price is at present, it appears to us that the risk/reward ratio is balanced in the wrong direction,” he added.
Shares in Sainsbury's rose 14p to finish on a high of 539p yesterday, with more than 90 million shares traded.
Property tycoon Robert Tchenguiz, behind the 2005 acquisition of Somerfield, snapped up a 3% stake in the chain.