Sainsbury’s boss Mike Coupe has downplayed fears over Brexit and remains “absolutely convinced” of the rationale to acquire Home Retail Group.
A number of retailers have revealed their disappointment with last month’s shock decision to leave the EU, with Debenhams chairman Sir Ian Cheshire, Ann Summers chief executive Jacqueline Gold and Carpetright boss Wilf Walsh among those to voice their concerns over the result.
But Coupe has shrugged off suggestions that Brexit will hinder the grocer’s long-term strategy as he unveiled further detail surrounding its acquisition of Argos owner Home Retail.
Coupe was speaking to the press as the retailer published a 182-page prospectus relating to the proposed £1.4bn deal, which warned of the potential impact of the vote to leave the European Union.
The prospectus flagged that Brexit “has caused and may continue to cause market uncertainty and volatility.
“If the UK’s economic condition weakens, or if financial markets continue to exhibit uncertainty and/or volatility, the ability of the Sainsbury’s Group, the Home Retail Group or, following completion of the acquisition, the combined group to grow their respective businesses could be materially adversely impacted.”
The document added: “Global economic conditions and uncertainties may also impact the Sainsbury’s Group’s, the Home Retail Group’s and, following completion of the acquisition, the combined group’s suppliers, including for example, supplier plant closures or increases in the cost of products and services.”
“We remain committed to making the deal happen. We believe that we can still deliver against the synergies and the execution that we have outlined.”
Mike Coupe, Sainsbury’s
Coupe said the prospectus detailed this as one of the potential risks surrounding the deal, but reaffirmed his commitment to the acquisition.
“We don’t know what’s going to happen next, but clearly the economic conditions have changed and we have to recognise that in the documentation,” Coupe said.
“We remain absolutely convinced by the strategic rationale of the deal and we think it will strengthen our business rather than detract from our business, for obvious reasons.
“We remain committed to making the deal happen. We believe that we can still deliver against the synergies and the execution that we have outlined, regardless of whatever economic conditions prevail over the next period of time.”
‘Uncertainty presents opportunity’
Coupe added: “The period of uncertainty presents an opportunity as well.
“Fundamentally, Sainsbury’s is a strong business, Argos is a strong business, and the two businesses combined create a very significant retailer.
“You’re taking the second-largest retailer in the UK and the largest non-food retailer in the UK, benefiting from roughly 2,000 outlets, the second-most-visited transactional website in the UK and a footfall of 27 million customers.
“That feels like a combination that is more likely to succeed over the next period of time, rather than less likely.”
Sainsbury’s prospectus also detailed plans to run the food business and Argos as separate entities.
It means the supermarket giant plans to keep Home Retail Group’s headquarters in Milton Keynes open, alongside its existing offices in Holborn and Coventry.
Coupe said the acquisition, which is currently being probed by the Competition and Markets Authority (CMA), would create “a net 1,000 or more retail roles”, but admitted there would be “a reduction in the corporate and support function roles where there is duplication”.
Sainsbury’s finance boss John Rogers, who will take over as boss of Home Retail following the proposed acquisition, will set about building his senior management team as one of his top priorities in the role.
Home Retail Group shareholders will vote on the acquisition at its AGM on July 27.
The deadline for the CMA’s decision on the deal is July 25.