Delta Two has been pursuing Sainsbury's since it started amassing shares in the supermarket chain earlier this year. It made a preliminary £10.6bn bid in July.
In a statement released this morning, Sainsbury's said Delta Two had revised its proposed offer of 600p a share in cash with £4.85bn in funding by way of ordinary shares, preference shares and payment-in-kind notes.
It also had new commitment letters from its financial banks ABN Amro, Credit Suisse and Dresdner Kleinwort for debt facilities totalling £9.6bn.
Delta Two had also “provided assurances” to Sainsbury's that it would have operational flexibility to compete and that relationships with suppliers and support for quality and diversity of food production in the UK would be maintained.
“We have held extensive discussions with Delta Two over a number of weeks and believe that their revised proposal is comprehensive and, if it results in an offer, that offer would be recommendable to shareholders,” said Sainsbury's chairman Sir Philip Hampton.
“The board has unanimously decided it is now appropriate to permit Delta Two to undertake confirmatory due diligence,” he added.