Home Retail Group shares jumped 5% on Monday on the back of speculation about a bid from Asda.
Analysts said that the Argos and Homebase owner would be a sensible target for Asda, which, in order to fulfil its growth strategy in non-food, may have to consider acquiring a large business of Home Retail Group’s scale and customer base.
Asda chief executive Andy Bond’s move to become part-time chairman and the timetabling of yesterday’s strategy update “further aroused suspicion” that Asda was considering making an acquisition according to Singer analyst Matthew McEachran.
He said: “Most observers regard Home Retail as an attractive take-over target for Asda.” But he cautioned there could be “competition obstacles to overcome, given Argos’ leading positions in some general retail product categories”.
Home Retail will reveal full-year results on April 28.