Disposal

Sainsbury(J) PLC
26 March 2004


26 March 2004



J Sainsbury plc announces the sale of its US business, Shaw's Supermarkets, and
return of capital


Sainsbury's announces today that it has agreed to sell Shaw's, its US
supermarkets business, to Albertson's, Inc. for US$2,475 million (£1,366
million). Upon completion, Sainsbury's will receive cash proceeds of US$2,107
million (£1,163 million) and Albertson's will assume US$368 million (£203
million) of store leases currently capitalised on Sainsbury's balance sheet.
The sale will give rise to an exceptional post tax profit in excess of £225
million in the financial year ending 27 March 2005.  The value of the proceeds
has been protected by an effective hedge, in the form of US dollar denominated
debt, of US$1,678 million.

Under Sainsbury's ownership, Shaw's has grown to be a leading player in all of
the New England states and is the second largest food retailer in the New
England area with 202 stores. In considering the disposal of Shaw's, the Board
has taken into account the increasingly competitive environment in the US
grocery market and believes Shaw's best interests are served by being part of a
larger US food retailer.

Following completion of the sale, Sainsbury's intends to return 35p per share to
shareholders, representing approximately £680 million. It is expected that this
return of capital will be made by way of a B Share scheme, providing
shareholders with maximum flexibility in terms of tax treatment by allowing them
to choose whether to receive the return as either income or capital. This method
of return allows all shareholders to be treated equally on a pro rata basis and
for those who elect for capital will give some choice as to when the return is
made.

The remaining proceeds from the sale will be reinvested to develop Sainsbury's
core UK retail business, to support future growth and to strengthen Sainsbury's
market position. Approximately half of this will go towards the acquisition of
20 stores from three retailers, which Sainsbury's is currently negotiating. The
remaining amount will be retained by Sainsbury's to pursue additional investment
opportunities, including further expansion into the convenience sector.

Peter Davis, Sainsbury's group chief executive, said: 'I am delighted to
announce what is an excellent deal for Sainsbury's, realising value and enabling
us to return a substantial sum to shareholders. The balance of the sale proceeds
will be re-invested in growing our UK business and this, together with the
benefits arising from our extensive business transformation programme, will
strengthen our overall market position.'

'The Board of Sainsbury's is very grateful to the management and employees of
Shaw's for all their efforts in building, over the last 20 years, such a strong
business. Shaw's has a great brand name with talented and committed staff.'

The sale of Shaw's will lead to earnings per share dilution in the financial
year ending March 2005, but this will be mitigated by the return of capital and
share consolidation together with the re-investment in growth opportunities in
the UK. In determining the amount of capital to be returned, the Board of
Sainsbury's has sought to balance the desire to return proceeds of a profitable
investment to shareholders, the specific investment opportunities available in
the UK market and the objective of maintaining an appropriate capital structure.
The Board expects a revision to Sainsbury's credit rating as a result of these
actions and is comfortable that Sainsbury's will maintain a good investment
grade rating. In addition, the Board is confident that the on-going balance
sheet provides sufficient flexibility. After the sale of Shaw's and return of
capital, the pro forma group net debt at 27 March 2004 is estimated at £1.5
billion. In the year ended 29 March 2003 Shaw's had sales of £2,866 million and
profit before tax of £92 million. The net assets of Shaw's were £863 million as
at 29 March 2003.

Completion of the sale to Albertson's is expected to take place by early May
2004. The Sale and Purchase Agreement contains a price adjustment mechanism,
whereby the cash proceeds would be subject to a reduction of 6.9 times the
amount by which the audited EBITDA, for the period ended 28 February 2004, is
more than US$10 million (3%) below the current estimate.  The Sale and Purchase
Agreement also contains conditions to closing typical in a transaction of this
kind in the US, including (i) anti-trust (Hart-Scott-Rodino) clearance and (ii)
the audited EBITDA, for the period ended 28 February 2004, being less than US$35
million (10%) below the current estimate.  Subject to the completion of the sale
of Shaw's the return of capital to shareholders is likely to complete in July
2004.

There will be two conference calls today for analysts and investors with Peter
Davis and Roger Matthews, the details are:

To help ensure the conference begins in a timely manner, please dial in 5 to 10
minutes prior to the scheduled start time.

09:15 (GMT):  telephone [phone]

14:00 (GMT):  telephone [phone] (UK) or [phone] (US)

There will be a replay of both calls, which will be available until Friday, 2
April 2004. Please email Kally Wilson ([e-mail]) for
details.


Enquiries:



Investor relations                                   Media
[phone]                                 [phone]
Roger Matthews                                       Pip Wood
Lynda Ashton

UBS Investment Bank                                  Goldman Sachs & Co
[phone]                                 [phone]
Hew Glyn Davies                                      Christopher French
Seamus Moorhead                                      Nick Reid

Finsbury                                             Hoare Govett
[phone]                                 [phone]
Roland Rudd                                          Mark Astaire
Rupert Younger                                       Andrew Osborne


Notes:

The B Share scheme will be accompanied by a share consolidation in order to
maintain comparability of share price, EPS and dividends. It is expected that
the appropriate resolutions to effect the B share scheme and share consolidation
will be proposed at an EGM to be held immediately following the AGM on 12th July
2004. Relevant documentation setting out full details of the B share scheme, the
share consolidation and notice of the EGM will be sent to shareholders together
with the notice of the AGM in June. On the basis that shareholders elect for
immediate return, receipt of the return is expected in July 2004.

Goldman, Sachs & Co and UBS Investment Bank acted as financial advisers to
Sainsbury's in connection with the sale of Shaw's and UBS Investment Bank is
acting as financial adviser in relation to the return of capital.  Hoare Govett
is acting as joint broker in relation to the return of capital.

In translating US dollars to pounds sterling an exchange rate of 1.8117 (the
Bank of England closing rate at 16:00 (GMT) yesterday, 25 March 2004) has been
used.

EBITDA is defined as net income adjusted by adding back interest and tax
expenses, depreciation,  amortisation of goodwill and other non cash expenses.

Hart-Scott-Rodino refers to the US Hart-Scott-Rodino Antitrust Improvements Act.

Goldman, Sachs & Co and UBS Investment Bank are acting for J Sainsbury plc and
no-one else in connection with the sale of Shaw's Supermarkets and will not be
responsible to any person other than J Sainsbury plc for providing the
protections afforded to clients of Goldman, Sachs & Co and UBS Investment Bank
respectively, or for advising any other person in relation to the sale of Shaw's
Supermarkets or any other transaction or arrangement referred to in this
announcement.


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