• Steinhoff reveals it will not make an offer for Home Retail Group
  • Sainsbury’s has until 5pm to reveal its hand
  • The duo had been locked in battle to gain control of the Argos owner

Steinhoff has pulled out of the running to buy Argos owner Home Retail Group, paving the way for Sainsbury’s to acquire the business.

The South African conglomerate said in a statement to the Stock Exchange that “it does not intend to make an offer for HRG.”

Instead the group, which owns the Harveys furniture chain in the UK, has agreed terms of a recommended all-cash offer to be made by another of its businesses, Conforama, to acquire Darty.

In a separate statement, Steinhoff revealed Darty shareholders would receive 125p per share under the terms of the cash offer.

It said: “The board of Conforama believes that the successful completion of the all-cash offer will create a leading French household goods retailer, operating under well established and complementary retail brands.

The latest unexpected twist in the battle for Argos means the way has been left clear for Sainsbury’s to bid for Home Retail. It has until 5pm to reveal its hand in advance of the “put up or shut up” deadline imposed by the Takeover Panel.

Until this afternoon, Steinhoff had been tussling with Sainsbury’s for control of Argos ever since it threw its hat into the ring in February.

Sainsbury’s revealed its interest in acquiring Argos owner Home Retail in January, proposing a cash plus shares bid that valued the group at £1.3bn – at a time when it also owned the Homebase DIY chain, which it has since sold to Wesfarmers.

The grocer’s boss Mike Coupe has outlined his vision for integrating Argos into the Sainsbury’s business and believes it would allow the supermarket giant to compete with the likes of Amazon, John Lewis and Marks & Spencer in non-food.

Coupe said the potential deal would “accelerate” the retailer’s multichannel strategy and “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 had seemed poised to tie up a deal, but South African retail conglomerate Steinhoff, in which billionaire retail tycoon and New Look-owner Christo Wiese is an investor, proposed a rival all-cash offer of 175p per share in February, valuing Home Retail at £1.4bn.

But Steinhoff has now sensationally pulled out of the running with just hours to go until today’s 5pm deadline.

The move sparked a 10% nosedive in Home Retail’s share price.