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Sainsbury's takeover of Home Retail Group approved

Published 22/07/2016

The competition regulator has approved Sainsbury's takeover of Argos owner Home Retail Group
The competition regulator has approved Sainsbury's takeover of Argos owner Home Retail Group

Sainsbury's £1.4 billion takeover of Argos owner Home Retail Group has been approved by the competition regulator.

The supermarket chain welcomed the decision by the Competition and Markets Authority on Friday to "unconditionally" clear the acquisition.

The (CMA) had said it was looking into whether the tie-up with Home Retail could result in a ''substantial lessening of competition''.

The approval comes after an eventful start to the year for Home Retail, which sold off its DIY chain Homebase to Australian conglomerate Wesfarmers for £340 million in February and agreed the takeover by Sainsbury's a month later.

Argos posted its best sales performance for two years last month, with total sales rising 2.6% to £868 million, thanks to a surge in online sales.

Home Retail chief executive John Walden will leave the group once Sainsbury's seals its acquisition, currently expected in the third quarter of this year.

Sainsbury's said its swoop for Home Retail Group will still need the approval of the Financial Conduct Authority and the backing of Home Retail's shareholders during a court and general meeting on Wednesday.

It now expects the tie-up to be complete by early September.

A spokesman for Sainsbury's said: "We are pleased that the CMA has unconditionally cleared our proposed acquisition of Home Retail Group.

"The combination of both businesses will create a multi-product, multi-channel proposition with fast delivery networks, giving customers what they want, whenever and wherever they want it."

Sainsbury's won its takeover tussle to snap up Home Retail Group in April after fending off the pursuit of South African retailer Steinhoff International.

It said the deal would c reate a business with around 2,000 stores, concessions and click-and-collect outlets.

The British grocery sector continues to be locked in a supermarket price war, which has seen the Big Four supermarkets slash their prices to protect market share from the rise of German discounters Aldi and Lidl.

Sainsbury's reported a 0.8% drop in like-for-like sales excluding fuel for the 12 weeks to June 4.

The fall marked a setback after a return to quarterly like-for-like growth for the first time in more than two years the previous three months, when sales edged 0.1% higher.

The supermarket announced on Thursday that it would create 900 jobs and trial a same-day delivery service to meet the growing demand for online shopping in the UK's fiercely competitive grocery sector.

The supermarket giant said it will start the same-day service at three stores, before rolling it out to 30 stores by Christmas, to keep pace with a rise in online orders across London.

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