Steinhoff enters bidding war

by Reuters 0

LONDON Feb 19 (Reuters) – South African-based furniture retailer Steinhoff International has made a rival offer to buy Britain’s Home Retail, the owner of the Argos group of catalogue-based stores which agreed earlier this month to be bought by supermarkets group Sainsbury’s.

Steinhoff, which makes furniture mostly in developing countries and retails its products in Europe, said on Friday it had made a proposal to the Home Retail board which if accepted would give shareholders 147.2 pence in cash plus 27.8 pence in capital return and dividend payments before completion.

Steinhoff said it was supportive of Home Retail’s decision to sell its Homebase chain to Wesfarmers Ltd, a move that would return 200 million pounds ($287 million) to Home Retail shareholders.

Home Retail said it was reviewing the proposal and urged its shareholders to take no further action.

Steinhoff’s offer comes at a time when Britain’s grocery sector has been hammered by the growth of discount groups including Germany’s Aldi and Lidl and by online competition.

Home Retail had previously said it was willing to recommend the Sainsbury’s bid of 161.3 pence per Home Retail share, valuing the firm at 1.3 billion pounds ($1.87 billion).

A combination of Home Retail and Sainsbury was expected to create the country’s largest general merchandise retail business.

The acquisition is a response to intense competition between British supermarket groups and makes Sainsbury’s the second largest player in the sector, less reliant on a food market showing little growth.

Combining Sainsbury’s and Home Retail’s Argos will forge a group offering over 100,000 products from 2,000 stores, bigger than the UK clothing and general merchandise business of Tesco , Britain’s biggest retailer, John Lewis, Marks & Spencer and Amazon, which is fast expanding into the UK grocery market. ($1 = 0.6965 pounds) (Reporting by Kate Holton and Vidya L Nathan; Editing by Greg Mahlich)