Sainsbury’s tables £1.4billion bid to buy Argos owner Home Retail Group
The supermarket giant plans to create a world-leading food and non-food business for customers, but the move could lead to Argos store closures
Sainsbury’s tabled a £1.4billion bid on Friday to buy Argos owner Home Retail Group.
The supermarket giant, which had a £1.3billion cash and shares offer accepted by the Home Retail board back in February, had until 5pm last night to make a formal bid or walk away under Takeover Panel rules.
Just half an hour before the deadline Sainsbury’s announced the offer which it said would create a world-leading food and non-food business for customers and shareholders. It would have around 2,000 stores, “fast delivery networks” and 200,000 employees making it one of the UK’s biggest private employers.
Sainsbury’s chief executive Mike Coupe said the combination would be “powerful”, boosting revenues and creating savings of £160million, up from an anticipated £120m in its original offer.
He added that the bulk of the savings would come from closing “some” Argos stores and moving them into Sainsbury’s outlets as concessions. But he denied this would lead to significant job losses.
“This is about making more jobs, not less,” Coupe said. “Through our concessions we would be bringing Argos to parts of the UK where they are not located at the moment.”
In a statement Home Retail Group said: “Sainsbury’s has stated its wish to obtain the recommendation of the board of Home Retail Group for its offer, and we look forward to working with Sainsbury’s towards such a recommendation.”
Sainsbury’s path had been cleared earlier in the day when rival South African retailer Steinhoff, which owns UK furniture firm Harveys and had made a rival offer for Home Retail of £1.4billion, said it had pulled out of the takeover race.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Success would bring in around £4bn a year of non-food sales to the group. But Argos has been a serial underperformer and a recent sales update was hardly buoyant. So lots of potential, if it goes right, but plenty of potential for things to go wrong too.”