The owner of the British store chain Argos, Home Retail Group, has accepted an acquisition bid by supermarket chain Sainsbury's. The entire operation should be finalized by the end of the third quarter already.
Offer accepted unanimously
Sainsbury’s offered 1.4 billion pounds (1.75 billion euro) to acquire Argos' parent company, 74 % above the company's value at the start of January, when the offer was revealed publicly. Home Retail Group's board of directors decided to accept the offer unanimously.
For the high-end supermarket chain, this is largest acquisition ever. Sainsbury's now hopes to improve Argos' efficiency by moving its stores to Sainsbury's locations, while costs will have to be cut and purchase conditions will need to improve. On the other hand, Sainsbury's will obtain a major distribution network in the United Kingdom, which should help it fight off online competitors, like Amazon, more easily.
Sainsbury’s expects the Home Retail Group acquisition to bring in at least 160 million pounds (200 million euro) of additional profit by the third year after the acquisition. Previously, it targeted a 120 million pound (150 million euro) additional profit.