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LONDON (Alliance News) - The potential takeover of Home Retail Group PLC by J Sainsbury PLC was disrupted late on Friday after an international furniture and household goods retail chain made its own offer for the owner of Argos and Homebase.
Steinhoff International Holdings NV said it has put forward a proposal to Home Retail seeking its recommendation for a possible all-cash offer, which would be for 175.0 pence per Home Retail share - considerably higher than the deal currently on the table from Sainsbury.
The overall value of the Sainsbury offer implies a price of around 161.3p per Home Retail share.
Steinhoff said the all-cash offer would be comprised of 147.2 pence per share in cash followed by another 25.0p payment per share in capital returns from the sale of Homebase, and another 2.8 pence payment per share in lieu of a final dividend in respect of the financial year ending February 27, 2016.
Importantly, Steinhoff said it is "supportive" of the ongoing disposal of Homebase, with that 25.0 pence payment being defined as a capital return and expected to come from the sale of Homebase - a similar deal to what Sainsbury has offered.
The question of what to do with Homebase was an issue for Sainsbury, as it is primarily interested in securing the Argos chain.
Earlier this month, Sainsbury reached an agreement over the financial terms of the proposed deal to takeover Home Retail.
Under the deal with Sainsbury, Home Retail shareholders would receive 0.321 of a new Sainsbury's share and 55.00p in cash for each Home Retail share. They will also get another 25.0p per share from the GBP200.0 million capital return planned from the sale of DIY and garden centre chain Homebase to Australian conglomerate Wesfarmers Ltd.
Steinhoff said it reserves the right to make a lower offer than 175.0 pence per share if it can agree a lower price with Home Retail or if another party excluding Sainsbury makes an offer that is lower than 175.0p per Home Retail share.
Home Retail released its own statement Friday confirming the proposal.
"The board is reviewing the Steinhoff proposal with its advisers and will make a further announcement in due course. Home Retail Group shareholders are advised to take no action at this time," said Home Retail.
"There can be no certainty that a firm offer will be made, nor as to the terms on which any firm offer might be made. The board will issue a further statement if and when appropriate," Home Retail added.
Home Retail shares closed down 1.2% to 153.38 pence per share whilst Sainsbury shares closed down 1.2% to 259.92 pence.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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