Sainsbury’s is in the home stretch for its acquisition of Argos as the board of directors at Home Retail Group voted unanimously to recommend a £1.4bn bid to shareholders.
It emerged in January that Sainsbury’s had approached Home Retail Group with a takeover bid, which was summarily rejected. Since then shareholders have kept a close eye on the development of the deal.
Following rival bidder Steinhoff’s decision to withdraw its £1.4bn offer, which trumped Sainsbury’s previous offer of £1.3bn, in favour of a takeover of Darty, Sainsbury’s was free to pursue the final purchase. Home Retail Group’s board of directors will now recommend the deal to shareholders, and it is expected that the deal could officially reach completion in the third quarter.
“Argos is both an icon of the British high Street and also a leader in the digital transformation of UK retailing,” said John Coombe, Chairman of Home Retail Group. “We are pleased that Sainsbury’s has recognised our progress and our potential with its recommended acquisition. This is a testament to the vision and hard work of management and all our colleagues.”
The specifics of the deal with regards to Argos’s hundreds of outlets across the country are still unclear. As leases expire and Sainsbury’s selects which of its own outlets will bring in Argos concessions, anything from dozens to hundreds of Argos stores may close.
The deal will now be investigated and scrutinised by the Financial Conduct Authority. Under the terms of the proposed offer, Home Retail Group shareholders will gain 25p for each of their shares in the parent company, which will reflect the £200m cash return generated through the sale of Homebase in January. This will ultimately lead to 171.5p a share, valuing Home Retail Group at £1.4bn.
“Our next steps are to focus jointly on ensuring we obtain the necessary regulatory clearances and that we are well prepared for the future integration of these two great retailers,” said Sainsbury’s Chairman David Tyler.