The FTSE 100 stock, which ranks as the UK's second largest supermarket chain, saw double-digit share price gains in the wake of weekend press reports that US private equity outfit Apollo Global Management has shown initial interest in Sainsbury's.
Shareholders were sent into a frenzy on the reports but it is understood that Apollo's takeover interest is currently primarily elsewhere in the UK supermarket sector.
Apollo remains in talks with a consortium led by private equity peer Fortress to potentially join the group's takeover offer for Morrisons, for the UK's fourth largest grocer.
The Fortress-led consortium had been in the driving seat to buy Morrisons for £6.7 billion until rival bidder Clayton, Dubilier & Rice (CD&R) laid a £7bn offer late on Thursday evening.
Takeover interest in Morrisons from private equity had already helped to buoy share valuations across UK supermarket chains in recent months.
Sainsbury's shares had also been heavily shorted earlier this year and the lift in value has been boosted by a number of exits by shorting investors.
Ross Hindle, an analyst at research firm Third Bridge, said: "The UK supermarket industry is one of the most competitive in the world yet there has been speculation about bids for Morrisons and Sainsbury’s for years.
"Similarly to Morrisons, Sainsbury's is very attractive to private equity investors because of its property portfolio. Sainsbury's also has two other advantages, a very loyal customer base and a strong digital strategy.
“The group has self-checkout and was an early adopter of customer self-scanning. Usage of the Sainsbury's app has seen an enormous spike during Covid and the customer stickiness it is driving is remarkable.
"Timing is also a factor. After 18 months of disruption, every big grocer has capacity expansion plans, especially for their digital businesses. These have accelerated so much that some colossal choices need to be made about how shopping is going to evolve over the next decade.”
He added: "Our experts say a deal could be very good for Sainsbury's. The supermarket began a 'something more' strategy with its acquisition of Argos.
“Refreshed ownership could provide the momentum to accelerate the Sainsbury’s and Argos integration, which provides lots of options from a property and teams perspective."
Apollo also recently targeted a takeover of another rival, taking part in the auction process to buy Leeds-based Asda, before it was bought by the Issa Brothers and private equity backers TDR Capital.
Last week, CD&R announced a new £7bn bid for Morrisons, though the takeover battle may not be over.
The deal has been unanimously accepted by the board of the grocery chain and directors have said shareholders should vote in favour of the takeover at a meeting due in early October. Fortress released a statement on Friday saying that it was “considering its options”.
CD&R had originally been turned down by the Morrisons board over a potential £5.5bn bid.