Sainsbury's bid for Argos owner threatened by rival Steinhoff offer
Supermarket Sainsbury's could see its takeover bid for Argos owner Home Retail Group derailed after retailer Steinhoff pitched a rival offer.
Home Retail Group confirmed that it had received a "possible cash offer" from the South African-based furniture retailer valuing the company at 175 pence per share.
The announcement comes after Sainsbury's vowed to create a ''world-leading'' retailer bigger than rivals John Lewis and Amazon UK when it tabled an improved £1.3 billion offer for Home Retail Group earlier this month.
The supermarket giant had proposed a cash-and-shares deal - valuing Home Retail Group at 161.3 pence per share - which would create the UK's largest non-food store worth £6 billion.
Saisnbury's declined to comment on the rival bid. It will now have to make a firm offer for Home Retail Group by Tuesday Ferbuary 23.
Home Retail Group said it was reviewing the approach with its advisers, but added that there was no guarantee Steinhoff would make a firm offer.
Steinhoff - which owns UK furniture firm Harveys - is listed on the Frankfurt and South African stock markets.
It now must make a firm offer for Home Retail Group by Friday March 18.
Steinhoff said it was making the announcement so Home Retail Group shareholders were "fully informed" as they made a decision about the offer from Sainsbury's.
It also confirmed that it supported the £340 million sale of Home Retail Group's DIY chain Homebase to Australian business Wesfarmers.
Steinhoff's takeover approach comes in bigger than Sainsbury's at £1.4 billion.
Sainsbury's made a second approach for Home Retail Group on February 2 after its initial offer of £1 billion was rebuffed in November.
The supermarket's chief executive Mike Coupe said last month that the combination of the two companies would create the ''food and non-food retailer of choice'' with 2,000 combined stores.
Sainsbury's stated that the combination of the two companies would trigger cost savings of about £120 million in the third full year after the deal is complete.
It also estimated that around half the savings - £60 million - would come from relocating Argos stores into Sainsbury's supermarkets as concessions, as well as launching new Argos concessions and expanding Sainsbury's click and collect service.
The supermarket said previously that it could shut a raft of Argos stores and relocate them within its supermarkets if the deal was given the go-ahead.