LONDON (Alliance News) - J Sainsbury PLC on Friday said it has agreed a deal to acquire Home Retail Group PLC, ending its long-running pursuit of the Argos owner.
Sainsbury's will pay 55.00 pence per share in cash, plus 0.321 Sainsbury's shares to acquire Home Retail, valuing the company at GBP1.2 billion. Including the GBP200.0 million capital return Home Retail shareholders already stood to get from the sale of the Homebase DIY and garden centre business, the deal values Home Retail at GBP1.4 billion.
Sainsbury's said the deal values Home Retail at a premium of around 74% to its closing price on January 4, the day prior to Sainsbury's disclosing its offer.
The agreement ends Sainsbury's pursuit of Home Retail. The FTSE 100-listed grocer disclosed in January it had approached Home Retail in November about a possible cash and shares acquisition.
The pair have been in talks since then and, in the interim, Home Retail sold its Homebase business to Australian group Wesfarmers Ltd. Sainsbury's faced competition from Steinhoff International Holdings NV, the South African group which made a higher, all-cash bid for Home Retail but pulled out ahead of the deadline for making a firm offer.
Home Retail said its board intends to unanimously recommend the Sainsbury's offer.
"We are very pleased the board of Home Retail has recommended our offer for the acquisition of its business to its shareholders. The combined business will offer a multi-product, multi-channel proposition, with fast delivery networks, which we believe will be very attractive to customers and which will create value to both sets of shareholders," said David Tyler, Sainsbury's chairman.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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