Sainsbury’s has sealed a one billion deal to buy the Argos business after Home Retail Group’s board sanctioned the move.
Consequently, the supermarket has not had to up its £1.4bn offer, which Home Retail Group had been mulling amid the prospect of a potentially higher bid from South Africa’s Steinhoff. However, Steinhoff withdrew its bid two weeks ago, paving the way for Sainsbury’s to push its own terms through.
David Tyler, Sainsbury’s chairman, said: “We are very pleased the board of Home Retail Group has recommended our offer for the acquisition of its business to its shareholders. The combined business will offer a multi-product, multichannel proposition, with fast delivery networks, which we believe will be very attractive to customers and which will create value to both sets of shareholders.
The combined business will create a £6bn non-food business that will give both brands a stronger offering against the likes of John Lewis and Marks and Spencer as well as online players such as Amazon and eBay. Despite the improved prospects, jobs at Argos may be sacrificed due to Sainsbury’s plan to shutter up to 200 of its sites.
The deal is expected to be completed in the third quarter of the year and will see Sainsbury’s pay a combination of shares and cash. Home Retail Group’s shareholders will own around 12 per cent of the combined business.