In a statement, Sainsbury’s chairman David Tyler said: “The UK grocery retail industry is undergoing a period of intense change in customer shopping behaviour and in the competitive environment”.
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With Steinhoff no longer in the picture, Sainsbury’s – which was given the same deadline as Steinhoff by the Takeover Panel – was in prime position to seal a deal after it agreed the terms of a £1.3bn takeover back in February.
South Africa’s Steinhoff has backed away from making an offer for Home Retail, paving the way for J Sainsbury (LON:SBRY) to buy Argos’ parent.
Crucially, Sainsbury’s says that Home Retail is likely to recommend to shareholders that they should approve the deal.
The acquisition of Argos is set to help Sainsbury’s speed up efforts to expand its presence in the fast growing online market.
Steinhoff has instead agreed to buy electricals retailer Darty in a deal worth £673million.
Sainsbury’s has tabled a £1.4bn takeover of Home Retail Group after South African retail group Steinhoff ditched plans to make a rival bid for the Argos owner.
But Steinhoff topped that offer with a 175p per share proposal later in the month valuing HRG at £1.44bn.
The statement released by the supermarket says that it expects to make business synergies of as much £160 million (£231.8 million) in the third year after the deal is completed, up from £120 million (£174 million) in earlier estimates.
The chief executive of Sainsbury’s has framed a potential takeover of Argos against the rise of “more imaginative solutions” , including the merger of retail giants, to solving the conundrum of serving today’s promiscuous and increasingly digital shoppers.
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Commenting on Steinhoff’s withdrawal he said: “Nothing surprised me through this process and we’re really pleased with where we’ve got to”.
