The BBC reports that Sainsbury's said it made an offer to purchase Argos and Homebase owner Home Retail Group in November, but the offer was rejected.
"The combination of Sainsbury's and Home Retail Group is an attractive proposition for the customers and shareholders of both companies," said the retailer in a statement. Sainsbury's says it is now "considering its position".
The report reads: "Over the last year, Sainsbury's has been working in partnership with Home Retail Group trialling a number of Argos concessions in Sainsbury's stores. The board of Sainsbury's believes the combination of Sainsbury's and Home Retail Group is an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation. The combination is an opportunity to bring together two of the UK's leading retail businesses, with complementary product offers, focused on delivering quality products and services at fair prices, through an integrated, multichannel proposition."
Home Retail Group's shares grew by 25% following the announcement, while Sainsbury's shares fell 5%, concludes the BBC report.
Connor Campbell, a senior market analyst at www.spreadex.com, comments: "After an astonishing surge (by Home Retail Group) and a sharp fall (by Sainsbury’s) in the immediate aftermath of the rejected bid reveal, Wednesday has seen somewhat of a reversal, the supermarket (just about) clawing back some growth whilst the troubled retailer loses some of its lustre.
"In terms of the bid itself, there are questions over how sensible it would be for Sainsbury’s – already in a tough sector – to take on the burden of Argos, a store facing the seemingly insurmountable threat from Amazon. From Home Retail’s perspective, however, a takeover appears to be one of the few ways left for the company to try and turn its situation around."
Sainsbury's has until 2nd February to make a formal offer.
