Argos agrees to Sainsbury’s takeover

Sainsbury’s is to assume control of catalogue retail business Argos in a deal worth £1.4 billion.

The board of Argos’s owner, Home Retail Group, agreed to support the takeover bid on Friday.

Sainsbury’s will now have access to a major non-food operation, allowing it to compete with major household brands John Lewis and Marks & Spencer.

The deal is also a successful parry of recent thrusts into the food sector by online retailer Amazon.

Argos currently has 845 stores and employs 30,000 people, achieving sales of over £4 billion for the year to the end of February.

Sainsbury’s is expected to relocate many Argos stores within under-occupied space in its supermarkets. The retail chain has not confirmed how many sites could close but says that after the takeover there will be more than 2,000 sites, including concessions within and “click and collect” points alongside current formats.

Sainsbury’s chairman David Tyler said: “The combined business will offer a multiproduct, multi-channel proposition, with fast delivery networks, which we believe will be very attractive to customers and which will create value to both sets of shareholders.”

The news comes just days after Sainsbury’s released its Fourth Quarter Trading Statement for the nine weeks to 12 March 2016. The statement shows retail sales for the fourth quarter up 1.2 per cent, although this was offset somewhat by a 0.7 per cent fall in fuel revenues.

Chief executive Mike Coupe said: “We have delivered a strong performance this quarter. Our supermarkets recorded both like-for-like transaction and volume growth and we continue to exceed our internal metrics for service and availability.

“We also maintained our market share in the quarter. The market will remain competitive as food deflation continues to impact sales growth.”

The retailer also reported its online grocery sales grew at nearly 14 per cent and orders by nearly 19 per cent.