TSCDY Tesco PLC (PK)

LONDON—J Sainsbury PLC and Home Retail Group PLC agreed Tuesday on the terms of the U.K. grocer's £ 1.32 billion ($1.9 billion) acquisition of the Argos catalog owner, just hours before a takeover panel deadline.

Sainsbury is offering 0.321 of its shares and 55 pence in cash for each Home Retail share, after its earlier cash-and-stock offer made in November was rejected.

Sainsbury will also pay 25 pence a share to reflect the £ 200 million capital return from the sale of Home Retail's DIY unit Homebase and 2.8 pence in lieu of the final dividend.

Together the offer and capital returns value each Home Retail share at 161.3 pence, based on Sainsbury's closing share price of 244.6 pence Monday.

Earlier this month Sainsbury, the No. 2 U.K. supermarket chain by market share after Tesco PLC, said it had made an approach to Home Retail, without disclosing the price, which was rejected. Home Retail confirmed it had received an approach which it said undervalued the company and its long-term prospects.

The U.K. takeover panel had set a deadline of 1700 GMT Tuesday for Sainsbury either to make an offer or withdraw.

Write to Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

February 02, 2016 03:25 ET (08:25 GMT)

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