Steinhoff makes a play for Home Retail Group

A South African predator last night gatecrashed Sainsbury’s planned takeover of Argos.

Steinhoff, which owns Bensons For Beds and Harveys in the UK, launched a last-ditch £1.4billion cash offer for Home Retail Group.

The dramatic move, announced after the stock market closed last night, looks set to scupper Sainsbury’s £1.3billion plan to snap up the Argos chain.

The proposal from Steinhoff came ahead of Sainsbury’s ‘put-up or shut-up’ deadline to make a formal offer on Tuesday at 5pm.

Earlier this month Sainsbury’s and Home Retail agreed a three-week extension on the original takeover deadline in order to complete due diligence.

Sainsbury’s has been stalking Argos for months as it looks to bring together two of the biggest names in British retail.

It first made an offer in November and subsequent offers were rejected until it increased its proposal to £1.3billion, which comprises a mix of cash and shares which at the time was equivalent to 161.3p a share.

Since Sainsbury’s initial approach Home Retail has sold its Homebase chain for £340million to Australia’s Wesfarmers.

The Homebase sale is expected to complete by the end of March.

Steinhoff said it is ‘supportive of the ongoing disposal’ of Homebase.

Home Retail said in a statement: ‘The board is reviewing the Steinhoff proposal with its advisers and will make a further announcement in due course.’

Steinhoff’s offer totals 175p a share and will be more attractive to shareholders as it is all in cash.

Sainsbury’s offer is a mixture of cash – at 55p a share – and shares which, if it went through, would see Home Retail shareholders own 12 per cent of Sainsbury’s.

Steinhoff operates in 20 countries across 24 brands including Conforama in France. It is listed on the Johannesburg stock market with a market value of £14billion but moved its primary listing to Frankfurt last year as part of its European focus.

It first invested in the UK in 2001 and later bought the owner of Benson For Beds and Harveys in 2005.

Benson has around 270 stores in the UK while Harveys has 150 or so.

The retail and manufacturing giant is thought to have met with Home Retail in the past year but the first approach about an offer came this week.

Argos runs around 800 shops and if Sainsbury’s were successful in its bid it planned to close up to 200.

Home Retail’s share price was less than 100p at the start of the year, before news of Sainsbury’s interest emerged. Its shares fell 1.6p to 153.6p yesterday and Sainsbury’s slipped 2p to 261.1p.

The last-ditch bid threatens Sainsbury’s plans to help it compete with online rivals such as US giant Amazon and help both businesses compete on the High Street in the internet age.

Sainsbury’s wanted to use Argos expertise in home delivery to bolster its own position in the grocery delivery market as well as improve its non-food sales. Argos has already been trialling outlets in Sainsbury’s supermarkets.

Sainsbury’s will now be locked in talks over the weekend to decide whether to increase its bid or ask for an extension from the Takeover Panel.

Sainsbury’s declined to comment on the South African bid.

Source : Laura Chesters – ThisIsMoney.co.uk
www.thisismoney.co.uk/money/markets/article-3455220/South-Africans-make-ditch-bid-Argos-Sainsbury-s-deal-hijacked-rivals-make-31-4bn-offer.html

Home Retail Group made the following statement regarding the approach: 

Statement Regarding Steinhoff Announcement 

The Board of Home Retail Group plc (“Home Retail Group” or the “Company”) notes the announcement regarding a possible offer by Steinhoff (“Steinhoff”) and confirms that it has received an approach from Steinhoff regarding a possible cash offer for the Company for a total value of 175 pence per Home Retail Group share (the “Steinhoff Proposal”).  The Board is reviewing the Steinhoff Proposal with its advisers and will make a further announcement in due course.  Home Retail Group shareholders are advised to take no action at this time. 

In accordance with Rule 2.6(a) of the City Code on Takeovers and Mergers (the "Code"), Steinhoff will have until 5.00pm on 18 March 2016, being 28 days after today's date (or such later time and / or date as may be agreed by the Panel on Takeovers and Mergers in accordance with Rule 2.6(c) of the Code), to announce either a firm intention to make an offer for Home Retail Group in accordance with Rule 2.7 of the Code, or that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

There can be no certainty that a firm offer will be made, nor as to the terms on which any firm offer might be made.  The Board will issue a further statement if and when appropriate. In the meantime, Home Retail Group shareholders are advised to take no action.

This announcement is being made by Home Retail Group without the prior agreement or approval of Steinhoff.

Source : Home Retail Group
www.homeretailgroup.com