A source close to the deal said the price tag was £200m to £250m, not £130m as Sainsbury was reported to be offering in the press last weekend.
The Grocer initially tipped Sainsbury as a potential suitor for TM Retail - which operates the Martin’s, McColl’s and Forbuoys fascias - after Tesco bought T& S Stores in 2002 (The Grocer, November 9, 2002, p31).
Neither Sainsbury nor TM Retail chief executive David Saunders would comment on whether talks were taking place.
Saunders said: “It’s no surprise there is speculation because we are the biggest independent retailer in the country. We won’t make any comment.”
Analysts acknowledged the sale of TM Retail was the “last chance in the race for space”, following Tesco’s purchase of T& S Stores. But although TM Retail’s 314 c-stores and 118 variety stores could potentially be turned into Sainsbury Local outlets, the question remained as to what Sainsbury would do with its 759 CTN stores.
A £200m-plus price was right for the TM business, said one analyst, but he felt buying the chain would raise significant issues for Sainsbury at a time when it should be concentrating on getting its existing store formats right.
Another said: “Strategically this does not sound like a great move, but Sainsbury has made it clear it will look at everything to get the space.”
The analyst added: “Sainsbury gets debatable returns out of Locals and arguably its brand strength is in the M25 area, whereas TM is more a CTN asset and based in the north.”
Analysts also pointed out that Tesco’s difficulty in selling the Dillons chain was an indication there was not a ready market for large CTN chains in the UK - should Sainsbury try to sell the CTN estate. One suggested a TM deal would be as disastrous an idea as the ill-fated move by JS into Egypt, aborted in 2001.
Somerfield, which is working with TM on a pilot Somerfield Martin’s fascia, was “watching the situation closely”, said a spokesman. Saunders said TM planned to open more stores with Somerfield and there was no deadline for a full roll-out.