18th Mar 2016 16:47
LONDON (Alliance News) - J Sainsbury PLC Friday said it has made an offer to takeover the owner of Argos, Home Retail Group PLC, after a rival bidder dropped out only moments before the offer deadline.
Sainsbury's said Home Retail Group shareholders will be entitled to 0.321 Sainsbury's shares and 55.0 pence in cash. In addition, Home Retail Group shareholders will each receive a special dividend of 27.8 pence per share, it said.
Importantly, that special dividend will only be paid if Home Retail Group pays it before the Sainsbury's offer becomes unconditional.
That special dividend is comprised of 25.0 pence per share for the sale of Home Retail's Homebase chain to Wesfarmers, and a 2.8 pence dividend in lieu of a final dividend for Home Retail's financial year ended February 27, 2016.
Excluding the special dividend, the offer made by Sainsbury's represents and indicative value of 145.4 pence per Home Retail Group share, valuing the chain at GBP1.20 billion.
Including the special dividend, if paid, the offer represents and indicative value of 173.2 pence per share, valuing Home Retail Group at GBP1.40 billion.
Home Retail Group shareholders would own around 12% of the enlarged issued share capital of the new business.
Sainsbury's said Home Retail Group has not yet recommended its offer, but said it will continue to discuss the merits of the deal.
Sainsbury's said, following its due diligence on the offer, it believes it can achieve a higher level of earnings before interest, tax, depreciation and amortisation synergies in the third full year after the deal is completed, of "no less than" GBP160.0 million, compared to the previous estimate of only GBP120.0 million.
Steinhoff International Holdings NV, the owner of Benson for Beds and Harveys, was set to potentially launch a firm offer for Home Retail Group on Friday, but said it would no longer be making a bid after striking a deal to potentially acquire London-listed Darty PLC instead.
Sainsbury's shares closed down 3% to 273.20 pence per share on Friday whilst Home Retail shares closed down 9.9% to 163.20 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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