Sainsbury’s is considering upping its offer for Home Retail from £1.3bn to £1.5bn in an effort to outmanoeuvre bid rival Steinhoff.
Sainsbury’s had initially approached Home Retail with a £1.3bn proposed offer last month before South African retail group Steinhoff swooped in with a £1.4bn proposal. Neither have yet made a formal offer.
Sainsbury’s is thought to be considering a £1.5bn bid through a combination of cash and shares.
The higher offer has been made possible by the hike in Sainsbury’s own share price and Home Retail’s revelation last week that it has £100m more in reserves than previously thought after keeping a tight rein on costs over Christmas.
One source told the Mail on Sunday: “The changing circumstances and the ‘come on’ from HRG means Sainsbury’s could raise this offer to £1.5 billion without even breaking a sweat.”
A £1.5bn indicative offer would value Home Retail at 185p a share. Yet Sainsbury’s investors are concerned that the grocer may overpay for Home Retail as it strives to outbid Steinhoff.