Shareholders in Argos-owner Home Retail Group must have spent this afternoon on tenterhooks. Sainsbury’s and the South African retail giant Steinhoff both had until today to make a firm offer for the company or walk away.
Some had been expecting a pricey bidding war that could have caused a big headache for Sainsbury’s boss Mike Coupe. But in the end Steinhoff decided it wasn’t so interested after all. And at 3:20pm it announced it was passing up on the opportunity, paving the way for Sainsbury’s to step in. Around an hour later, less than 30 minutes before the deadline, the supermarket said it was making a firm offer.
The deal offers HRG shareholders 0.321 Sainsbury’s shares and 55p in cash per share, and values the company at around £1.4bn. They could still turn it down of course, but that would be a surprise now that Steinhoff has gone running.
Read more: Why Sainsbury's wants to buy Argos
The deal remains controversial though – it’s no coincidence that Sainsbury’s shares have fallen in the minutes since. The grocer wants to get its hands on Argos’s delivery network and to save cash by moving some of its stores into its existing estate.
‘This combination with HRG presents an opportunity to accelerate our strategy, delivering compelling revenue and cost synergies,’ its chairman David Tyler said today. ‘We will create a multi-product, multi-channel proposition with fast delivery networks that we believe will be very attractive to the customers of both businesses.’ It makes a compelling argument but some critics argue it is an unwelcome distraction at a time when the supermarket industry is struggling.
The last couple of months will have been exceptionally busy for Coupe, Tyler et al., but merging two big businesses is not easy. Assuming the deal gets the go ahead they have plenty more late nights ahead.