Sainsbury’s and Home Retail Group announced today they have agreed terms on a deal for the grocer to acquire the Argos owner for £1.3bn.

We look at the key numbers involved in the deal: 

  • The combined business will include a non-food retailer that is bigger than John Lewis or Amazon UK with 100,000 products and sales of £6bn 
  • A combined Sainsbury’s and Argos would have about 2,000 stores
  • Sainsbury’s expects EBITDA synergies of “not less than” £120m in the third year after completion
  • However to achieve these synergies the grocer expects one-off exceptional costs of £140m
  • Sainsbury’s also expects capital expenditure of about £140m in the three years following the deal owing to store refits
  • Sainsbury’s cash and shares offer values Home Retail at about £1.3bn. This equates to 161.3p per Home Retail share
  • Home Retail shareholders will receive 0.321 new Sainsbury’s shares for every Home Retail share they own, and 55p in cash per share. The Argos owner’s shareholders will own about 12% of the combined group
  • In addition, for the sale of Homebase to Australian retailer Wesfarmers, Home Retail shareholders will bag capital returns of 25p per share and 2.8p in lieu of a full-year final dividend
  • Sainsbury’s says the deal represents a “premium of approximately 63% to the closing price of a Home Retail Group share on January 4 2016, the last business day prior to the start of the offer period”
  • Sainsbury’s has until 5pm on February 23 to announce details of a firm offer, having been granted an extension by the Takeover Panel