Argos Owner Lifted By ‘Bidding War’

Steinhoff International Holdings made a 1.4-billion-pound ($2 billion) counter bid for Britain’s Home Retail Group, taking on J Sainsbury for control of the Argos stores owner.

Steinhoff, which already owns the United Kingdom furniture store Harvey’s and Benson for Beds, values Home Retail Group at £1.4bn, compared to Sainsbury’s £1.3bn offer.

Speaking to the BBC, a HRG spokesperson commented, “Home Retail Group shareholders are advised to take no action at this time”.

Sainsbury’s shares fell 2% on speculation that it may be forced to up the ante in the race to acquire the retailer.

The deadline for Sainsbury’s to submit a firm offer is supposed to be tomorrow – but sources report that the grocery giant may request an extension.

Steinhoff unexpectedly entered the fray just days before a February 23 deadline for Sainsbury to make a formal offer, seeking to gain control over more than 800 shops selling everything from jewellery to televisions.

Shore Capital analyst Clive Back said: “Entering a bidding war with Steinhoff, noting the cash element ‎of the new bidder, would show determination but may test the resolve of its shareholders and the assumption of not over-paying given the risks involved”.

This puts Sainsbury’s boss Mike Coupe in a hard predicament.

Both companies have said their attempts to purchase HRG will not affect the previously agreed deal to sell Homebase, which was purchased in January by Australian company Wesfarmers.

Home Retail said on Monday the Takeover Panel watchdog had extended Tuesday’s deadline for Sainsbury to formalize its takeover proposal to March 18, the same date as for Steinhoff to make a firm bid or walk away.

Where next for Sainsbury’s-Argos?