Sainsbury’s is to proceed with the acquisition of Argos owner Home Retail Group after its shareholders unanimously recommended the acquisition.
Based on the closing price of Sainsbury’s shares of 276.3 pence on 31 March 2016, the offer and proposed capital returns together represent an indicative value of 171.5p per share, valuing the deal at around £1.4bn.
David Tyler, chairman of Sainsbury’s, said: “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.
“The acquisition will now be carried out through a scheme of arrangement, helping to facilitate a speedy completion which is in the interests of the customers, colleagues and shareholders of both businesses. Our next steps are to focus jointly on ensuring we obtain the necessary regulatory clearances and that we are well prepared for the future integration of these two great retailers.”
As many as 200 Argos stores could close over the coming years as leases expire, with some relocated to Sainsbury’s stores.
At the end of February 2015, more than half of Argos leases were set to expire within five years, with an average unexpired lease term of 4.9 years.
The deal is expected to complete during the third quarter of 2016 and once completed Home Retail Group Shareholders will own around 12% of the share capital of Sainsbury’s.
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