Home Retail Group has backed Sainsbury’s £1.4bn takeover bid, ending almost five months of talks between the supermarket group and the owner of Argos to form a food and general merchandise retailer.
The terms of the deal remain unchanged from the offer Sainsbury’s made two weeks ago after Steinhoff of South Africa pulled out of the running. At the time, Home Retail said it would work towards recommending an offer to its shareholders.
Sainsbury’s will pay 55p in cash and 0.321 of its own shares for each Home Retail share, valuing Home Retail at £1.2bn, or 143.7p a share based on Sainsbury’s closing share price on Thursday.
Home Retail shareholders will also get 25p a share from the £200m sale of its Homebase chain and 2.8p a share in lieu of a final dividend for the financial year that ended last month. Those payments take the value of the deal to £1.4bn.
Some analysts had thought Home Retail might seek to extract a higher price from Sainsbury’s before recommending the offer to shareholders. But with no other suitor in sight, the offer remained unchanged despite Home Retail revealing an extra £100m in cash reserves during the bidding process.