Shares in both Home Retail Group and Sainsbury’s have fallen after Argos’ parent company gave its backing to a planned acquisition of the business by Sainsbury’s.
The decision means that Sainsbury’s final offer for the business, 0.321 new Sainsbury's shares plus 55p for every Home Retail Group share they hold, will now be put to shareholders.
This values Home Retail Group at £1.2bn, a figure which rises to £1.4bn when taking into account an additional 25p per share relating to Homebase buy-out of Wesfarmers and a further 2.8p per share in place of a final dividend payment.
John Coombe, chairman of Home Retail Group, said: "We are pleased that Sainsbury's has recognised our progress and our potential with its recommended acquisition of Home Retail Group. This is a testament to the vision and hard work of management and all our colleagues. We thank them for all they have done for Home Retail Group plc and Argos in particular and wish them well for the future."
David Tyler, chairman of Sainsbury's, added: "The acquisition will now be carried out through a scheme of arrangement, helping to facilitate a speedy completion which is in the interests of the customers, colleagues and shareholders of both businesses. 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."
Sainsbury’s is keen to transform itself into a multi-channel retailer as a result of the move, reducing its reliance on groceries by adding £4bn to its non-food sales.