Sainsbury's circles Argos and Homebase owner

Wed, 06 Jan 2016 | BUSINESS SALE

Sainsbury's has made known its bid approach, an “attractive proposition” to Home Retail Group for Argos and Homebase back in November.

The offer was rejected by Home Retail Group however, who said it “undervalued Home Retail Group and its long-term prospects”. Sainsbury's says it is now “considering its position”.

To abide by UK takeover rules, Sainsbury's would have to make a formal offer, should it decide to do so, by 2 February.

The supermarket group has been piloting Argos concessions inside some of its stores, with Sainsbury's saying the two groups have “complementary products”. In taking over Home Retail Group, Sainsbury's asserts that it would increase sales, improve its delivery service and create cross-selling opportunities.

Sainsbury's, which is the second biggest British supermarket in the UK with a 16.7 per cent slice of the grocery market, actually co-founded Homebase, selling it for £969 million to venture capitalist Schroder Ventures in December 2000.

Home Retail Group, which is presently worth about £1 billion, issued a profit warning in October, attributing the alert to the impact of Black Friday offers and having invested in its online ordering system. It has 1,051 stores across the UK, with a 47,000-strong workforce.

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