• Sainsbury’s submits bid for Argos owner Home Retail
  • Cash plus shares offer values the business at £1.4bn
  • Comes just an hour after rival Steinhoff pulled out of the running

Sainsbury’s has tabled a cash-plus-shares bid of £1.4bn for Argos owner Home Retail Group, just an hour after Steinhoff pulled out of the running.

The grocer revealed the offer half an hour ahead of its 5pm “put up or shut up” deadline, which had been set by the Takeover Panel.

Sainsbury’s will pay 55p in cash and 0.321 Sainsbury’s shares for each Home Retail share - the same offer it had previously proposed - valuing Home Retail at £1.2bn. 

But Home Retail Group shareholders are also expected to receive a special dividend of 27.8 pence per share, bringing the total value of the deal to 173.2p per share and £1.4bn in total. 

The Argos owner’s share price had plummeted as low as 160.9p earlier in the day after furniture and general merchandise giant Steinhoff ruled out a bid and instead revealed an offer for Darty.

The Home Retail board had previously indicated to Sainsbury’s that it would be willing to recommend its offer to shareholders, if a firm bid was eventually made.

Following due diligence, Sainsbury’s said it now expects “a higher level of EBITDA synergies of not less than £160m in the third full year after completion”.

That marks an increase of a third, having previously estimated synergies of not less than £120m.

’Compelling opportunity’

In a statement to the London Stock Exchange, Sainsbury’s reiterated that the offer “represents a compelling opportunity” to accelerate its multichannel strategy.

Sainsbury’s previously produced a 22-page presentation outlining its detailed plans for the combined business, which the grocer’s boss Mike Coupe insisted will allow it compete with non-food giants including Amazon and John Lewis.

He added the deal would “set Sainsbury’s up for the medium to long term”, with a combined business boasting 2,000 stores, 100,000 non-food products and a “world-leading” distribution network.

Sainsbury’s offer came merely an hour after its rival Steinhoff pulled out of the running for Argos during a dramatic afternoon.

The South African retail conglomerate, which owns the Harveys furniture chain in the UK and is backed by billionaire New Look owner Christo Weise, has instead made an 125p per share bid to acquire Darty. It said it had agreed terms of a recommended all-cash offer to be made by another of its businesses, Conforama.

 

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