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Sainsbury's Home Retail bid under threat

Sainsbury's bid to take over Argos-owner Home Retail Group is under threat.
February 23, 2016

Just like that, the potential takeover by British supermarket chain J Sainsbury (SBRY) of Argos-owner Home Retail Group (HOME) is in jeopardy. South African retail group Steinhoff - which owns UK high street brands Harveys Furniture and Bensons for Beds - has made a counter offer worth 175p a share, which equates to a deal value of around £2bn. This probably throws Sainsbury's 161p a share offer out the window, as far as Home Retail bosses are concerned.

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Initially, Sainsbury's chiefs only had a couple of days to decide their next move. However, late in the day, on Monday 22 February, the grocer successfully applied for a formal deadline extension from regulators. This means the company now has until 18 March to make another offer or let the deal fall through entirely.

In the meantime, the City has been busy dissecting the motives for Steinhoff's bid. The Frankfurt and Johannesburg-listed group has previously said it sees itself building a retail empire to rival Swedish furniture giant Ikea. It's this reason, perhaps, which makes the Argos chain of catalogue stores look like an appealing acquisition.