Rival Argos bid sends Home Retail Group shares up 13%
Shares in Home Retail Group have jumped 13% after a rival bid to Sainsbury”s was made for the Argos owner.
Home Retail”s shares closed at 173.5p on Monday – close to the 175p-a-share all-cash offer that South African retailer Steinhoff lodged on Friday.
Sainsbury”s, which bid about 167p a share, has been given until 18 March to make a formal offer for Home Retail.
It was granted an extension to the Tuesday deadline by the Takeover Panel following the Steinhoff bid.
Analysts said the share reaction showed investors thought the winning bid would be nearer Steinhoff”s £1.4bn offer.
Patrick O”Brien, content director at analysts Verdict Retail, said he expected Sainsbury”s to ask for more time to consider another bid.
On Friday, Home Retail Group said the board was reviewing the Steinhoff proposal and would make a further announcement soon.
“Up the ante”
Sainsbury”s current offer is worth around £1.3bn, but its shareholders have shown some resistance to the deal.
Brenda Kelly, head analyst at London Capital, told the BBC: “It”s going to be difficult I think for Sainsbury”s to convince shareholders to up the ante to compete with Steinhoff. Time will tell tomorrow.”
She said Steinhoff, which owns the furniture chain Harvey”s in the UK, has the ammunition to bid more, with a market value triple the size of Sainsbury”s.
“There”s plenty of push behind Steinhoff to get ahead of Sainsbury”s here,” Ms Kelly said.
Shares in Sainsbury”s fell almost 2.3% to close at 255.2p on Monday.
Mike Coupe, its chief executive, has said that combining Argos would create the UK”s “food and non-food retailer of choice”, with 2,000 stores.
The tie-up would create the UK”s largest general merchandise retail business.