Sainsbury's exploring bid for Palmer & Harvey - Sky News

LONDON (Reuters) - Sainsbury's , Britain's second largest supermarket group, is in the early stages of examining a takeover bid for wholesaler Palmer & Harvey (P&H), Sky News reported. P&H, owned by its current and former employees, distributes tobacco, alcohol, chilled and frozen products to about 90,000 retail outlets from a fleet of over 1,300 vehicles. It has an annual turnover of more than 4 billion pounds. P&H is a major distributor to Tesco , Britain's biggest retailer, which in January agreed a 3.7 billion pound takeover of wholesaler rival Booker - a deal that faces a lengthy competition probe. The Sky News report cited unspecified sources as saying that while Sainsbury's, which is a customer of P&H, was exploring a bid there was no certainty it would proceed with an offer. A spokeswoman for Sainsbury's declined to comment. P&H said in a statement: "We do not comment on market speculation. We have recently completed a successful refinancing, and as usual we continue to have positive discussion with our trading partners about building and extending our relationships." Analysts were sceptical on the chances of a bid materialising from Sainsbury's, noting the need for the April refinancing, and the fact that the supermarket group is still in the early stages of integrating last September's 1.1 billion pounds purchase of Argos-owner Home Retail. Shares in Sainsbury's were up 1.2 percent at 282.2 pence at 1315 GMT, valuing the business at 6.2 billion pounds. (Reporting by James Davey; Editing by Paul Sandle and Keith Weir)