British grocery giant Sainsbury’s is discussing a possible purchase of Home Retail Group, the owner of Argos and Homebase. The retailer, which was recently offered £1 billion has however decided to turn down the offer in hopes of seeing a higher bid.
Bid Considered to Low
According to The Guardian Sainsbury’s reason for offering to buy Home Retail Group is said to be a way of standing its ground in a time when many retailers face competition from global enterprises and an ever-higher share of the market moving online. Sainsbury’s could, together with Argos, give a strong offer in everything from groceries to electricals and furniture, is the intention from the proposed buyer.
However, Home Retail Group concidered the £1 billion bid to low, and several British analysists have openly questioned the entire deal.
- It seems like a desperate move from Sainsbury’s. Were they sipping the Christmas sherry early? This would be a distraction for them. They would be buying a retailer in very difficult markets requiring a huge amount of management time, said for example Tony Shiret, an analyst at Haitong Research.
"Sainsbury's Would Benefit Greatly"
But some say the deal could be neccessary in order to put up a fight against Amazon, which quickly conquer a larger part of food and grocery sales to the British consumers. According to Retail Times, the tie-up could be benefitial for escecially Sainsbury’s in terms of moving business online.
- Taking Argos, with its robust multi-channel offering, under its wing would have certainly boosted Sainsbury’s proposition. Argos’s same day delivery offering attracted a lot of attention over the Christmas period and Sainsbury’s would benefit greatly by having insight into the inner-workings of Argos’s model, said Darryl Adie, managing director at the e-commerce agency Ampersand.
Sainsbury’s now has up until the 2nd of February to come up with a higher bid or to leave the suggested deal behind.