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Argos shops could move to Sainsbury's if buyout proceeds

By Holly Williams

Published 14/01/2016

Home Retail posted a 2.2% fall in sales at established Argos stores
Home Retail posted a 2.2% fall in sales at established Argos stores
Sainsbury’s made an approach for the Home Retail Group, which owns Argos and DIY chain Homebase, in November, but the move was rejected. The supermarket now has until February 2 to make another offer or walk away from the purchase entirely

Sainsbury's revealed it could shut a raft of Argos stores and relocate them within its supermarkets as it set out the case for a £1bn-plus takeover of the Home Retail Group.

The chain said it was still "considering its position" after it took the market by surprise last week when it revealed it had made an approach for the group in November that was rebuffed.

Sainsbury's chief executive Mike Coupe remained tight-lipped on talks with Home Retail and plans for any improved offer.

Sainsbury's has 13 stores in Northern Ireland, and there are nearly 20 Argos and nine Homebase stores here.

In a presentation outlining its rationale for the tie-up, Sainsbury's said it would look to shut a number of the 734 stores in the Argos chain and bring them into its supermarkets as concessions.

Retail experts believe between 150 and 200 Argos stores could be affected.

Mr Coupe said overall Sainsbury's could expand the Argos chain by rolling out concessions in supermarkets nationwide.

He also stressed that the supermarket chain would not overpay for Home Retail amid reports that some major shareholders want at least £1.6bn.

"This is not a deal we need to do at any price," he said.

The comments came as Sainsbury's revealed a slightly better-than-expected performance over the Christmas season, with sales in established stores excluding fuel edging 0.4% lower in the 15 weeks to January 9 against a "highly competitive" market. Its trading failed to match the 0.2% sales increase reported on Tuesday by smaller rival Morrisons in what marked an unexpected result from the embattled group, although this was for the nine weeks to January 3.

Sainsbury's was the only one of the so-called Big Four to gain market share over Christmas, according to data from Kantar Worldpanel on Tuesday showing its share rising to 17% in the 12 weeks to January 3 from 16.9% a year earlier.

The City is eager to hear if Sainsbury's will increase its bid for Home Retail, which also owns DIY chain Homebase.

It has until February 2 to make a firm offer for the company or walk away under the City Takeover Panel's so-called put up or shut up deadline.

Sainsbury's said it believed around half of Argos stores had leases with less than five years to run, offering opportunities to shut a number of these and move them into its outlets. There are already 10 Argos concessions in Sainsbury's stores as part of a trial.


Offer some Home Retail Group shareholders are said to be holding out for

Belfast Telegraph

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