£1 billion takeover bid could be launched after initial approach in November was rejected.
Supermarket giant Sainsbury’s is considering its options on a takeover of Argos parent company Home Retail Group.
It has come to light that an initial bid back in November was rejected, with Home Retail Group saying it “undervalued Home Retail Group and its long-term prospects”.
If a deal does go ahead, it could have a major impact on the licensing sector.
The past year has seen Sainsbury’s trialling Argos concessions in some of its stores, with the grocer saying that the two companies have ‘complementary’ products.
It could also allow Sainsbury’s to grow its click and collect operations in suitable Argos stores.
Food and grocery analyst, George Scott, told the BBC that if a deal went ahead it would help Sainsbury’s to better establish its presence in the non-food arena.
“It would give it scope for shops within its existing stores where it has excess space,” he said. “I think it’s a well thought out proposition.”
However, analysts at Jefferies said that there was “little Sainsbury’s can add in terms of expertise in non-food multi-channel offerings, and as a result the potential acquisition of what is largely viewed as a structurally challenged business will raise some eyebrows”.
Sainsbury’s originally co-founded the Homebase chain, but sold it in 2000 for £969 million.
Sainsbury’s has until February 2 to decide whether to make a formal offer.
