Sainsbury Bid for Home Retail Group Rejected -- 3rd Update
05 Januar 2016 - 3:27PM
Dow Jones News
By Denise Roland
LONDON--U.K. retailer J Sainsbury PLC said Tuesday it made an
unsuccessful cash-and-stock offer in November for Home Retail Group
PLC, parent of Argos and former Sainsbury unit Homebase.
Sainsbury, the No. 2 U.K. supermarket chain by market share
after Tesco PLC, said Home Retail rejected the approach and no
further approach or formal offer is certain. Sainsbury didn't
disclose the value of its November offer. Home Retail Group had a
market capitalization of GBP802.9 million ($1.18 billion) as of
Monday's close.
The British grocer said a combination of the two companies would
create a broad-ranging retailer that could make use of both
companies' existing retail space and sell products to each other's
customers. Sainsbury also said there would be benefits to bringing
together the two group's online shopping and home delivery
capabilities. It highlighted that the two were already working
together in an experimental placement of Argos concessions in some
Sainsbury stores.
A merged Sainsbury-Home Retail Group would have an expansive
retail footprint across the U.K. Sainsbury operates more than 1,200
shops across the country, ranging from small convenience outlets to
out-of-town superstores. Argos and Homebase have 740 and 340
stores, respectively, according to the company websites.
Still, a tie-up likely would lead to the closure of some of
those stores. Sainsbury said a deal would provide "additional
cost-synergy potential through property rationalization, scale
benefits and operational efficiencies."
A deal also would bring the Homebase do-it-yourself chain back
into the hands of Sainsbury, which along with a Belgian retailer
co-founded what was then known as Sainsbury's Homebase in 1979.
Sainsbury sold the Homebase chain in 2000.
Home Retail Group couldn't immediately be reached for
comment.
The approach comes at a tumultuous time for the U.K.'s grocery
industry, which has struggled to adapt to changing customer habits,
largely due to heavy competition from discount retailers such as
Aldi and Lidl. Sainsbury said in November that its half-year
profit, at GBP375 million, was 18% lower than a year earlier.
Home Retail shares, which were already moving up Tuesday
morning, soared after Sainsbury's midday announcement. They were
lately up more than 36% at 135 pence in London trading. Home Retail
had traded above 200 pence less than a year ago but has declined
sharply as the company's stores have struggled in the tough U.K.
retail environment.
Sainsbury shares were down 4.2% to 245 pence Tuesday
afternoon.
Under U.K. takeover rules, Sainsbury has until 5 p.m. GMT Feb. 2
to make a firm offer for Home Retail or walk away.
Ian Walker contributed to this article.
Write to Denise Roland at Denise.Roland@wsj.com
Corrections & Amplifications
J Sainsbury PLC is the No. 2 U.K. supermarket chain by market
share after Tesco PLC. An earlier version of this article
incorrectly said it was No. 3 after Tesco and Wal-Mart Stores
Inc.'s Asda. (Jan. 5, 2016)
(END) Dow Jones Newswires
January 05, 2016 09:12 ET (14:12 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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