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| Sainsbury's offers £1.3bn for Argos | Sainsbury's offers £1.3bn for Argos |
| (35 minutes later) | |
| Sainsbury's has offered £1.3bn to win control of Argos owner Home Retail Group. | Sainsbury's has offered £1.3bn to win control of Argos owner Home Retail Group. |
| After revealing earlier this month that an approach last year was rejected, the supermarket giant has offered the equivalent of 161.3p a share for the retailer. | |
| The offer represents a 63% premium to Home Retail's share price on 4 January. | The offer represents a 63% premium to Home Retail's share price on 4 January. |
| A deal will depend on the sale of the Homebase DIY chain that Australia's Wesfarmers has agreed to buy for £340m. | |
| Home Retail said that combining the two companies would create "a food and non-food retailer of choice for customers" and optimise use of their combined retail space. | Home Retail said that combining the two companies would create "a food and non-food retailer of choice for customers" and optimise use of their combined retail space. |
| John Rogers, Sainsbury's chief financial offer, said he was confident that shareholders in both Sainsbury's and Home Retail would back the deal. | |
| The £120m of annual savings expected by 2019 was also a "conservative" figure, he added. | |
| Sainsbury's expected to make savings by moving Argos stores into supermarkets as leases expire, as well as removing "duplication and overlap" and selling its own clothing and homeware ranges through Argos. | |
| However, one-off costs of £140m would be incurred across the first three years. | |
| Steve Clayton, head of equities research at Hargreaves Lansdown, described the offer as a "bold play" by Sainsbury's. | |
| "It is looking to buy a struggling business when the supermarket itself is fighting strong headwinds," he said. | |
| "The takeover will be a considerable strain on management time when they already have quite a lot on their plate." | |
| Like-for-like sales at Argos fell 2.2% in the 18 weeks to 2 January. | |
| Home Retail shares, which had traded at about 100p before the approach by Sainsbury's, fell 0.4% to 152.3p on Tuesday, while Sainsbury's rose 1.6% to 248.6p. | |
| Deadline extension | |
| Sainsbury's had until 17:00 on Tuesday to make an offer for Home Retail. | |
| It now has three weeks under takeover rules to carry out due diligence on the Argos owner, meaning it must make a firm offer by 17:00 on 23 February or walk away. | |
| Under the cash-and-shares deal, Home Retail shareholders would receive 0.321 new Sainsbury's shares and 55 pence in cash for each share. | Under the cash-and-shares deal, Home Retail shareholders would receive 0.321 new Sainsbury's shares and 55 pence in cash for each share. |
| To reflect the proceeds of the Homebase sale, investors would also get about 25 pence per share and payment of 2.8 pence in lieu of a final dividend. | To reflect the proceeds of the Homebase sale, investors would also get about 25 pence per share and payment of 2.8 pence in lieu of a final dividend. |
| The chain's shareholders would own about 12% of the combined group if a deal progresses. | The chain's shareholders would own about 12% of the combined group if a deal progresses. |
| Home Retail said it "believes in the prospects for the standalone company", but that the possible offer provides an "attractive opportunity" for shareholders. | Home Retail said it "believes in the prospects for the standalone company", but that the possible offer provides an "attractive opportunity" for shareholders. |