Sainsbury’s is considering upping its offer for Home Retail from £1.3bn to £1.5bn in an effort to outmanoeuvre bid rival Steinhoff.

The two companies are vying to takeover Home Retail, which comprises solely of Argos after the retailer sold Homebase to Wesfarmers, and have until Friday to submit their offers.

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.

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