Search

Sainsbury’s in £1.3bn bid to buy Argos owner Home Retail Group

09:52 02 February 2016

Sainsbury’s has tabled a proposed deal of up to £1.3bn to take over Argos owner Home Retail Group.

The supermarket giant has made a “possible offer” of 161.3 pence per Home Retail Group share.

As part of the cash and shares deal, Home Retail Group shareholders will own about 12pc of the combined group, if it gets the go-ahead.

Home Retail Group said it “believes in the prospects for the standalone company”, but the possible offer provides an “attractive opportunity” for its shareholders to receive full valuation for their shares.

However, the sale of Home Retail Group’s DIY chain, Homebase, to Australian business Wesfarmers is said to be a condition of the possible offer by Sainsbury’s.

The £340m deal, which will see the Homebase name replaced by the Bunnings Warehouse brand, is still awaiting the approval of shareholders.

Sainsbury’s had until 5pm on Tuesday to make a fresh bid for Home Retail Group after its £1bn offer was rebuffed in November.

The company said previously that it could shut a raft of Argos stores and relocate them within its supermarkets if the deal was given the go-ahead.

Retail experts believe between 150 and 200 Argos stores could be impacted.

The supermarket has already been working in partnership with Home Retail Group to test a number of Argos concessions in Sainsbury’s stores.

The retailer believes the combination of the two companies would create a strong food and non-food retailer with strong heritages.

Home Retail Group’s shares fell 3pc in early trading to 148.1p, while Sainsbury’s share price also dipped 0.6pc to 243p.

The companies confirmed that they have agreed a three-week extension on the deadline of the deal to 5pm on Tuesday February 23 in order to complete the due diligence on the proposed offer.

If approved, the combination of the two companies would trigger EBITDA synergies of about £120m in the third full year after the deal is complete, Sainsbury’s said.

It is estimated that about a half of the savings will be found by relocating Argos stores into Sainsbury’s supermarkets as concessions, as well as launching new Argos concessions and expanding Sainsbury’s click and collect service.

It also expects to deliver a third of the savings by removing back office functions which overlap between the two companies and by selling Sainsbury’s clothing and homeware products to Argos customers.

The supermarket said that, in order to bring the savings to bear, it will face a one-off costs of about £140m, split equally over three years.

Search hundreds of local jobs at Jobs24

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other Eastern Daily Press visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by Eastern Daily Press staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique Eastern Daily Press account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

HOT JOBS

Show Job Lists

Insight

Emma Watson and her daughter, H who was the inspiration for Little Hotdog Watson.

Norwich-based designer, Emma Watson, tells us why she decided to start her own business and reveals the special meaning behind the company’s unique name, Little Hotdog Watson.

Green 100

cover

Enjoy the Green 100
digital edition

Read

Mustard TV

Meet the Team

Mark Shields

Business Editor

|

Chris Hill

Agricultural and Farming Editor

|

Business Most Read

Awards

Norfolk Future 50 EDP Business Awards Green 100

Business Most Commented

Newsletter Sign Up