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Sainsbury’s biggest investor could back renewed offer for Argos

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Qatari Investment Authority, Sainsbury’s biggest investor, has suggested that it might back the grocer were it to make a renewed offer of over £1bn for Argos.

The green light from Qatari, which owns 25% of Sainsbury’s, is necessary at a time when the city is in two halves about the proposed acquisition.

It is understood that the supermarket chain is pushing for the first draft of a deal with Home Retail ahead of the take over panel’s 2 February deadline, where Sainsbury’s will need to take it or leave it.

The UK’s second largest supermarket chain quietly made a takeover bid to Home Retail in November 2015 at a rumoured 130p a share but was rejected. In riposte it put together a substantial presentation outlining a proposal, citing that the combined number of product lines would put it in stead to compete with retail giant such as John Lewis and Amazon.

According to The Times, market experts believe there is “willingness” among a number of shareholders in both Home Retail and Sainsbury’s to agree a deal but much will depend on the price.

Home Retail’s investors have already expressed unease that the board did not consult them when Sainsbury’s first made an offer in November. Toscafund and Schroders, top five investors in Home Retail, are believed to have pushed both sides to negotiate a fresh deal, the newspaper reported.

This has been heightened by Home Retail’s £340m, sale of Homebase to Australian group Wesfarmers, paving the way for Sainsburys’ to pluck Argos – the only retailer it was ever really interested in.

On Monday Credit Suisse said a deal looked likely to go ahead:

 “Given the comprehensive list of justifications provided by Sainsbury and a transaction that looks accretive at virtually any price, we expect Sainsbury to announce a deal prior to the deadline,” it said. “We do not expect Sainsbury to morph into Amazon or Ocado, but then it doesn’t need to — it just has to stay ahead of Tesco and Asda.”


Published on Wednesday 27 January by Veebs Sabharwal

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