The board of Home Retail Group, which owns catalogue retailer Argos, is backing Sainsbury’s £1.2 billion takeover offer.
In a filing on Friday, Sainsbury’s says Home Retail Group’s “Directors now intend unanimously to recommend the Acquisition.” It comes three weeks after Sainsbury’s tabled a fresh bid.
Sainsbury’s initially approached the Argos-owner in early January about a possible takeover, before making a firm offer at the start of February. Both approaches were both knocked back Home Retail Group.
Sainsbury’s chairman David Tylor says in today’s statement:
We are very pleased the Board of Home Retail Group plc 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.
Home Retail Group shareholders will own 12% of Sainsbury’s once the deal is completed. Sainsbury’s has already said it expects to make business synergies of as much £160 million (£231.8 million) in the third year after the deal is completed, up from £120 million (£174 million) in earlier estimates.