London Briefing:Rarely has there been as colourful a cast of characters as those who hold the future of Britain's third-largest supermarket chain in their hands.

Just three months after successfully rebuffing private equity bidders, J Sainsbury is back in the thick of it with a proposed 600p-a-share offer from an investment fund backed by the oil-rich Gulf state of Qatar.

Included among the dramatis personae are not only the Qatari royal family and an Iranian billionaire, but two British peers, a prime minister, a comprehensive school bad boy and a disgraced former Tory MP.

The Three Delta fund which manages Qatar's huge wealth is run by Paul Taylor (42), former right-hand man to billionaire Iranian property developer Robert Tchenguiz.

After breaking out on his own, Taylor chose to name the fund after his old class at Wandsworth comprehensive; a class once told by the headmaster: "Nothing good is ever going to come from Three Delta."

Unions who represent many of the 150,000 staff at Britain's oldest food retailer would clearly still agree with the headmaster's view of Three Delta.

In a furious reaction to the proposed offer, they insist that it would be against the national interest for Sainsbury's "to become the nationalised property of a Gulf state".

Having waved through foreign bids for companies such as Corus (the old British Steel), MG Rover, P&O, Abbey National, BAA and much of the utilities sector, the British government is highly unlikely to heed the unions' calls for intervention.

Joining the unions in opposition to the bid are cousins Lord (David) Sainsbury of Turville and Lord (John) Sainsbury of Preston Candover, scions of the founding family and both former chairmen of the group.

They came out firmly against the 582p-a-share private equity bid for the company in April and do not appear overly impressed with Delta's proposed 600p offer.

As representatives of the Sainsbury family's 18 per cent stake in the group, they were flown out to Sardinia earlier this month, where details of the deal were presented by Taylor and the man whose money he invests - Sheikh Hamad bin Jassim bin Jaber al Thani, the prime minister of Qatar and a member of the ruling royal family.

Despite having previously indicated that a bid "north of 600p" might be enough to open up the books, the details the Lords Sainsbury were given on the holiday island did not go down well, by all accounts.

Even though Qatar is sitting on a mountain of petro-dollars, the £10.4 billion (€15.5 billion) Sainsbury's deal is to be bankrolled by as much as £6 billion of debt, which would leave the supermarket chain burdened with hefty repayments.

Remarkably similar, in fact, to the way a private equity buyer would structure a dealand bringing with it the same tax advantages that leave private equity partners liable for as little as 10 per cent tax on their remuneration.

Such tax breaks, already the subject of fierce criticism by MPs and trade unions, were originally intended to help small entrepreneurs borrowing money to start a business - certainly not for the likes of private equity, nor the Qatari government's investment fund.

(Incidentally, another intriguing and somewhat bizarre cast member in the Sainsbury's saga is disgraced former Tory MP David Mellor, who resigned as a minister amid a flurry of tabloid headlines back in the 1990s. Although Delta has denied reports that Mellor is advising the Gulf state on political matters pertaining to the Sainsbury's bid, it confirmed that he is employed as its business development director.)

Meanwhile, Delta maintains it has no plans to leverage Sainsbury's £8.6 billion property portfolio, although few in the City are convinced by its protestations and many fear that the shops will be sold, leaving the group exposed to vast rental payments on the stores.

That might not be a problem when times are good, but it would be a huge burden in a downturn.

Attempting to woo the family may have failed, but that does not mean Delta's deal will go the same way as the failed private equity approach. Not only are Delta's terms higher, but the investment fund has also built up a key strategic stake in the supermarket group. At 25 per cent, it has now overtaken the family as the biggest single shareholder.

Also sitting on a key block of shares in Sainsbury's is Taylor's former employer, Robert Tchenguiz. He holds 5 per cent and speaks for a further 5 per cent in the form of derivatives and contracts for difference.

The Iranian-born billionaire is not acting in concert with the Qataris - that would not be allowed under Takeover Panel rules - but his aims for Sainsbury's are known to be similar, and he has in the past attempted to persuade the group to leverage its property assets.

For shareholders, 600p a share is certainly a tempting price. The Sainsbury's board has made it clear that it has no plans to utilise the property portfolio to return cash to investors and there seems to be little doubt that the shares will go into sharp retreat should the Delta deal fail.

The question now is whether the Qataris are prepared to restructure or raise their deal to win board - and family - approval, or whether they will be brave enough to launch a formal offer and let the shareholders decide

Fiona Walsh writes for the Guardian newspaper in London