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HRG shareholder pushes Sainsbury’s for a 1.4bn deal

Argos and Sainsbury's bags in Sainsbury's trolley

A major investor in Argos-owner Home Retail Group has increased the pressure on bidder Sainsbury’s by saying a deal would need to be worth at least £1.4bn.

Talks between the two retailers were said to be on a knife-edge last night.

Schroders, which owns a 20 per cent stake in Home Retail, is thought to have urged Sainsbury’s to offer 165p a share, well above the 150p price – about £1bn – the supermarket giant was hoping to table.

The two sides were locked in talks on Sunday ahead of tomorrow’s deadline when Sainsbury’s must either make a bid or walk away under Takeover Panel rules. The two sides could, however, request an extension to the deadline while they try to hammer out a deal.

Sainsbury’s approached Home Retail in November but had its offer rejected as being too low. At the time, Schroders was thought to have been upset because it had not been consulted.

Sainsbury’s chief executive Mike Coupe said last month that he would be prepared to walk away if a sensible price could not be reached.

Analysts believe Argos would be a natural acquisition for Sainsbury’s, as it would allow its e-commerce business to compete with Amazon, which offers one-hour delivery across many parts of the UK.

Also 40 per cent of Argos’s leases expire by 2020, which would enable Sainsbury’s to shut around 200 Argos shops and incorporate them within its stores, providing a ‘one-stop shop’ for customers.

Home Retail Group’s sale of DIY chain Homebase in January was said to pave the way for Sainsbury’s to purchase the retailer, given it had little interest in entering the hardware sector.

in early trade this morning, Home Retail shares on the FTSE 250 index were up 3.2 per cent or 4.3p to 141, while FTSE 100-listed Sainsbury's was up 1,5p at 246.6p.

Source : Luca Morreale –

31 January 2016

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