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Sainsbury’s emphasises multichannel synergies in fresh Home Retail Group offer

Sainsbury's emphasises multichannel synergies in fresh Home Retail Group offer

Sainsbury’s put the emphasis on multichannel synergies in a second, £1.4bn, offer for Argos owner the Home Retail Group .

The supermarket’s offer, which came just 30 minutes before deadline and after rival Steinhoff had withdrawn from the race, values Home Retail Group at £0.3bn more than its previous bid.

In its offer, Sainsbury’s emphasises a vision of a unified Argos and Sainsbury’s that would “bring together multichannel capabilities, including digital, store and delivery networks to provide fast, flexible and reliable product fulfilment to store or to home across a wide range of food and grocery, clothing, homewares, toys, stationery, electrical goods, furniture and other general merchandise.”

Sainsbury’s, which already has 10 Argos digital format stores located inside its supermarkets, said in today’s announcement that the takeover would enable it to move Argos stores into its supermarkets, while filling gaps in Argos’ store network with new stores-within-a-store. Multichannel links between the two could include Argos click and collect in Sainsbury’s stores.

Ultimately, said Sainsbury’s, the offer represented a chance to build a “leading food and non-food retailer of choice for customers, building on the strong heritage of both the Sainsbury’s and HRG businesses whose brands are renowned for trust, quality, value and customer service.” Customers would benefit from the “right combination of location, range, speed and flexibility, across a wide range of products.”

Argos is an Elite retailer in the IRUK Top500 research, while Sainsbury’s is a Leading retailer in the index.

Sainsbury’s chairman David Tyler said the offer came at a time of major change in retail. “The UK grocery retail industry is undergoing a period of intense change in customer shopping behaviour and in the competitive enviromenment,” he said. “Against this backdrop, Sainsbury’s has performed resiliently by offering great quality products at fair prices, by providing a differentiated service, and by developing strong multi-channel capabilities. All of this continues to be underpinned by our core values.

“This combination with HRG presents an opportunity to accelerate our strategy, delivering compelling revenue and cost synergies. We will create a multi-product, multi-channel proposition with fast delivery networks that we believe will be very attractive to the customers of both businesses.”

If Home Retail Group shareholders accept the offer, Sainsbury’s expects the deal to complete in the third quarter of the year. Home Retail Group responded to the offer by saying it looked forward to working with Sainsbury’s to reach an offer that its board could recommend.

Sainsbury’s first set out its interest in Argos earlier this year. It had been working towards a February deadline for a £1.1bn bid for the retailer until South African rival Steinhoff said it planned to offer £1.4bn. As a result, the Argos deadline was reset to today. Steinhoff earlier today pulled out of the race in favour of a bid for French retailer Darty, owner of the Conforama furniture chain.

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