MARKET REPORT... CorporateIn a dramatic twist of fate, J Sainsbury, which was last year one of the many unsuccessful bidders in the battle to buy rival Safeway, has now itself become a takeover target.

As speculation continues to mount concerninga potentialbidfor Sainsburys, the FTSE 100 supermarket chain is understood to have instructed magic circle firm Linklaters for legal advice.

Linklaters corporate partner David Barnes, who advised Sainsburys on its bid for Safeway last year, is thought to be on standby to advise the retailer on defence tactics should a bid materialise.

Meanwhile, US firm Milbank Tweed Hadley & McCloy has been advising Lord David Sainsbury, whose holding in the supermarket is estimated to be around 23 per cent. Lord Sainsburys interest in the supermarket is held in a blind trust by Judith Portrait. Under Department of Trade and Industry rules on blind trusts, Lord Sainsbury is forbidden from giving Portrait any instructions about his shareholding.

No formal bid has been made for Sainsburys, but rumours are rife of a potential offer from Royal Mail chairman and ex-Asda chief Allan Leighton.

UK private equity giant Permira and US venture capitalist Kohlberg Kravis Roberts & Co are also reported to be interested in mounting a bid for Sainsburys.