Sainsbury’s “considering its position” after Home Retail Group rejects bid
Sainsbury’s is “considering its position” after its approach to Home Retail Group’s Board of Directors regarding a possible offer was rejected. Home Retail Group is the owner of both Homebase and Argos.
In a statement issued today (5 January), Sainsbury’s said that “there can be no certainty that this will result in a formal offer, nor as to the terms of any such offer”, but it also went on to point out why it believed that a link-up between the two retail groups would make good business sense.
“Over the last year, Sainsbury‘s has been working in partnership with Home Retail Group trialling a number of Argos concessions in Sainsbury‘s stores. The Board of Sainsbury’s believes the combination of Sainsbury‘s and Home Retail Group is an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation,” said Sainsbury’s.
“The combination is an opportunity to bring together two of the UK’s leading retail businesses, with complementary product offers, focused on delivering quality products and services at fair prices, through an integrated, multi-channel proposition.”
Sainsbury’s then listed seven “specific” benefits of pooling their resources, including the argument that they would “bring together multi-channel capabilities and delivery networks for fast, flexible and reliable delivery to store or to home across a wide range of food and non-food products”.
As previously reported by Post&Parcel, Argos recently ramped up its delivery infrastructure to launch its “Fast Track” UK-wide same-day home delivery and store collection service.
UPDATE ON WEDNESDAY (6 JANUARY)
The Sainsbury’s statement prompted an swift response from the markets.
Connor Campbell, a senior market analyst at www.spreadex.com, summed up the market sentiment for Post&Parcel this morning: “After an astonishing surge (by Home Retail Group) and a sharp fall (by Sainsbury’s) in the immediate aftermath of the rejected bid reveal, Wednesday has seen somewhat of a reversal, the supermarket (just about) clawing back some growth whilst the troubled retailer loses some of its lustre.
“In terms of the bid itself, there are questions over how sensible it would be for Sainsbury’s, already in a tough sector, to take on the burden of Argos, a store facing the seemingly insurmountable threat from Amazon.
“From Home Retail’s perspective however a takeover appears to be one of the few ways left for the company to try and turn its situation around.”
