J Sainsbury's plc's offer of £1.3b for Home Retail Group – owner of the Argos, Homebase and Habitat brands – should it come to fruition on 23rd February following a term of due diligence inspections, will see the business become the UK's largest non-food retailer.
Sainsbury's has revealed that it intends to build on its existing synergies with Argos, as well as that brand's extensive online and home delivery infrastructure, to create "a retailer fit for the future", offering a strong mix of complementary products – including homewares – to a customer base of around 25 million each week.
"We would be able to create a £6b non-food business that would rival Next, Amazon and Kingfisher, and really create a non-food business of scale," comments a spokesperson. "It would also give us significant access to increased digital capability.
"We currently have 10 Argos trial concessions in store, and will have the opportunity to fold in a lot more to create a destination for sectors including home furnishings, giving customers easier access to products under one roof."
Sainsbury’s believes that the combination will generate EBITDA synergies of no less than £120m in the third full year after completion, further enhancing the attractiveness of the offer. It also expects to incur costs of approximately £140m across the first three full years, plus the same again in store fit-out expenditure.
The transaction is subject to several factors including the concurrent sale of Homebase to Asutralian conglomerate Wesfamers for £340m.