Sainsbury's £1bn bid for Home Retail Group rejected
Sainsbury’s has made a £1bn move to buy Home Retail Group, the owner of Argos and Homebase, as it seeks to strengthen its business against the rise of the discounters and Amazon.
The supermarket group said it had made an approach to Home Retail in November, but its proposal was rejected last month.
Sainsbury’s, which has Argos outlets in a handful of its stores, said it was now considering its position. Under takeover rules, the retailer has until 5pm on 2 February to either announce a firm intention to bid or to withdraw.
Shares in Home Retail Group soared 41% to 139.3p after the supermarket put out a statement on Tuesday, valuing the group at £1.1bn. However, shares in Sainsbury’s fell by almost 5%, to 242p, as investors feared the supermarket would be distracted in the midst of tough grocery market conditions.
Sainsbury’s, which was forced to put out a statement by the Takeover Panel, a City regulator, after a spike in Home Retail Group’s share price, said its board believed a combination of the two groups would be “an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation”.
It added that the two businesses had complementary product offers which they would be able to deliver to shoppers at home or for pick-up in stores. It is understood that Sainsbury’s is interested in Argos’s delivery network and IT systems which it believes will help it take on Amazon.
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