Sainsbury’s plan to acquire Home Retail Group is in limbo as the UK retailers struggle to reach an agreement over price, according to four people familiar with the matter.
Sainsbury is unwilling to pay more than 150 pence a share, which would value Home Retail at about £1.2 billion, said one of the people, who declined to be identified as talks have yet to be concluded. Home Retail won’t sell for less than 170 pence, that person said.
Sainsbury has until February 2 to make a formal bid for the Argos owner under UK takeover rules and is unlikely to seek an extension to that, another person said. The deal may fall apart this weekend, two of the people said, though no final decision has been made and an offer is still possible.
Home Retail shares fell as much as 12 per cent to 125 pence in London after the Financial Times reported that talks had stalled. Sainsbury stock rose as much as 3.9 per cent.
Home Retail would be Sainsbury’s biggest acquisition, giving it more than 800 Argos stores and a vastly expanded product delivery network. The grocer is seeking to fight back in a market beset by discount competition where efficient distribution has become crucial in winning the increasing number of shoppers that want to order online.
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