Sainsbury's make last minute bid for Argos

2 February 2016

sainsburys Sainsbury's proposed takeover of Argos-owner, Home Retail Group, has been going on a while now, with the supermarket unsure what they actually wanted to do of late.Well, it looks like it'll be happening, as the takeover deadline closes today.

It looks like J Sainsbury has reached an agreement to buy Home Retail Group, worth somewhere in the region of £1.3bn.

Sainsbury's had to act quickly, as by law, if no deal was agreed, they would have had to go away for 6 months, and make no more attempts to buy the company in that time. That could see other businesses trying to swoop in, so the supermarket had to be sharpish.

Last week, both parties reached an 'impasse', stalling over the price of the deal, according to a report The Times. Sainsbury's initially offered £1.1bn, it seems, which wasn't enough for the HRG execs. Either way, the interest in this takeover has been very good for Home Retail Group shares, which went up 4.1% yesterday, to 142p, after being worth 100p earlier in the year.

Sainsbury's meanwhile, will invariably be looking at closing a number of unprofitable Argos stores, and turning them into concessions which appear in their supermarkets. The terms of this offer would see Sainsbury’s forking out £1.1bn for equity of the company, and they'll also honour an existing Home Retail agreement that would see £200m being returned to to shareholders following the sale of Homebase, to Wesfarmers for £340m.

It looks like Sainsbury's want to team up with Argos, in a bid to great a rival to Amazon, who are going great guns at the minute. Of course, Amazon are taking on the grocery market this year, with all manner of things planned. With Aldi and Lidl thrown into the mix, supermarkets are going to have to diversify their business, if they want to stay relevant.

As long as those bloody Argos aliens don't come back, it'll be interesting to see what Sainsbury's have in mind for Argos.

TOPICS:   Economy


  • Alex
    Read a detailed analysis of the supermarket landscape at the tail end of last year. The thought was that one would fall by the wayside and either get taken over by a competitor or dwindle to the point of obscurity. Interestingly the report suggested that of the two strugglers, Morrisons and Sainsburys, it would be Sainsburys that went belly up as Morrisons owns it's properties while Sainsburys tends to lease them. Last desperate throw of the dice from Sainsbo then?!
  • pete
    A merger of a failing supermarket and a poorly performing, old-fashioned catalogue shop. What could possibly go wrong?

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