Industry analysts predict that there is little hope for Sainsbury’s in its bid to acquire Home Retail Group, the company that owns the retailer Argos. Sainsbury’s have expressed an interest in buying to company but pressure has been building on the supermarket chain to deliver on its word. As of this week it has managed to secure more time to decide whether or not to go ahead with the purchase.
Sainsbury’s has previously agreed a deal in principle and has spent several weeks going through due diligence ahead of making its firm offer to Home Retail Group. However, the supermarket was greatly outbid when an offer came in from Steinhoff. Steinhoff is a South African retail giant who has begun to make a name for itself in the United Kingdom with Harveys and Bensons For Beds. They made an offer of £1.42 billion which is £110 million higher than Sainsbury’s offered.
Sainsbury’s now has to return its offer before March 18th 2016, which is the same date that the South African retailer Steinhoff will be expected to put up its own offer. This could create an auction – and this is precisely where the supermarket chain is expected to lose out in its bid to acquire Argos and its parent company. Many people do not expect Sainsbury’s to up its bid or go as high as Steinhoff are prepared to. After all, the latter company has a £14 billion value that is almost three times as high as Sainsbury’s.
Nevertheless, Sainsbury’s has been growing a lot recently, even outperforming its big four rivals in the supermarket sector. So we won’t know exactly how the company will act until, and it is something we will simply have to keep a close eye on as the deadline date approaches.