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Sainsbury's Takes on Amazon With Argos Acquisition Mike Coupe, CEO of Sainsburys

Sainsbury's Takes on Amazon With Argos Acquisition

2016-02-03 15:35

The British grocery giant has agreed terms to buy Home Retail Group, the owner of Argos, in a £1.3bn deal.

Last month it became known that Sainsbury's had offered £1 billion for Home Retail Group, the owner of Argos and Homebase. An offer that was rejected but now Sainsbury's has reached a £1.3 billion deal to buy Home Retail, The Guardian reports.

The offer involves Sainsbury's paying £1.1bn for equity of Home Retail. The grocer also plans to honour an existing Home Retail agreement to return £200m from the sale of Homebase, Home Retail’s DIY and homeware business.

In order to complete due diligence, Home Retail and the UK’s takeover regulator have agreed to extend a deadline for Sainsbury's to make a firm offer to February 23.

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Baking a Bigger Cake

With the takeover Sainsbury's would become the UK’s largest non-food retailer by revenue, ahead of John Lewis or Amazon UK with about 2,000 stores and 100,000 products combined.

Plans are to shut down the majority of the existing Argos stores and put Argos outlets in Sainsbury's large stores as well as selling items online. Something Sainsbury's expects to generate cost and revenue gains of at least £120m.

– Our customers want us to offer more choice and for that choice to be faster than ever, driven by the rise of mobile phone and digital technology. It will enhance both businesses. We are baking a bigger cake than either company can bake by themselves, says Mike Coupe, Sainsbury's chief executive.

Jimmy Andersson

Senior editor

Freelance journalist who have gone from covering sports to online retailing. Been writing about e-commerce for four years.

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