• Deadline looms for Sainsbury’s to proceed with an offer for Argos
  • Sainsbury’s faces competition from Steinhoff for control of Argos
  • Sainsbury’s could increase its offer or walk away

Sainsbury’s bosses led by chief executive Mike Coupe are considering how to proceed ahead of a deadline tomorrow to table an offer for Argos.

The deliberations follow Steinhoff’s entry into the fray for control of Home Retail-owned Argos.

Steinhoff, in which billionaire retail tycoon and New Look owner Christo Wiese is an investor, has offered 175 per share for Argos owner Home Retail Group.

The all cash offer values Home Retail at £1.4bn, versus £1.3bn from Sainsbury’s whose offer involves shares as well as cash.

The intervention of Steinhoff could lead Sainsbury’s to increase its offer.

The grocer could also ask for an extension of tomorrow’s deadline.

However, Sainsbury’s has insisted it will not overpay for Argos, and could walk away from a deal.

Home Retail said on Friday: ”The board is reviewing the Steinhoff proposal with its advisers and will make a further announcement in due course. Home Retail Group shareholders are advised to take no action at this time.”

Sainsbury’s has so far not commented on the development.

Bernstein analyst Bruno Monteyne said: “Sainsbury’s might be keen to avoid a bidding war, but we would expect them to match the Steinhoff bid, and hope that the fact they are further down the line on due diligence will mean the board will accept their offer.”

Separately, there are concerns that Sainsbury’s plans to team up with Argos might face a competition investigation. The Sunday Telegraph reported that the two companies’ overlaps in toys and small electrical appliances could face scrutiny.