SUPERMARKET Sainsbury’s has confirmed hundreds of Argos stores could close under plans to buy owner Home Retail Group as it set out its case for the £1 billion-plus takeover.
The group said it was still “considering its position” after it took the market by surprise last week when it revealed it had made an approach the group in November, which was rebuffed.
But in a presentation outlining its rationale for the tie-up, Sainsbury’s said up to half of the Argos chain’s 734 stores could be shut and instead brought into its supermarkets as concessions.
Sainsbury’s chief executive Mike Coupe remained tight-lipped on talks with Home Retail and plans for any improved offer, although he stressed the group would not overpay amid reports that some major shareholders want at least £1.6 billion.
“This is not a deal we need to do a deal at any price,” he said.
The comments came as Sainsbury’s revealed a slightly better-than-expected performance over the Christmas season, with sales in established stores excluding fuel edging 0.4% lower in the 15 weeks to January 9 against a “highly competitive” market.
Its trading failed to match the 0.2% increase in festive sales reported on Tuesday by smaller rival Morrisons in what marked an unexpected result from the embattled group.
But Sainsbury’s was the only one of the so-called Big Four to gain market share over Christmas, according to data from Kantar Worldpanel on Tuesday showing its share rising to 17% in the 12 weeks to January 3 from 16.9% a year earlier.
The supermarket hailed the “huge success” of its Mog’s Christmas Calamity advert, featuring popular children’s book character Mog the Cat, as the sales performance marked a significant improvement on the 1.1% sales drop in the previous three months.
The City is eager to hear if Sainsbury’s will increase its bid for Home Retail, which also owns DIY chain Homebase.
It has until February 2 to make a firm offer or walk away under the City Takeover Panel’s so-called put up or shut up deadline.
Sainsbury’s said while it would likely shut up to half of Argos stores, which have shop leases with less than five years to run, there would be an increase in the number of overall sites as it outlined aims to roll out concessions nationwide.
There are already 10 Argos concessions within Sainsbury’s stores as part of a trial.
The group said it was a “strategically compelling transaction” which would allow it to take on the might of rivals such as Amazon, with more than 100,000 general merchandise products between Argos and Sainsbury’s.
It also sought to answer critics who have questioned cross-selling opportunities, claiming that over 40% of households have shopped in both Argos and Sainsbury’s over the past year.
But there was no mention of Homebase, stoking speculation that it would seek to offload the business.
Mr Coupe said he “couldn’t be drawn on it”.
The takeover saga will remain in the spotlight on Thursday as Home Retail will be looked to for its take on the tie-up when it updates on recent trading.