Home Retail Group shareholders want at least GBP 1.6bn from Sainsbury
A trio of Home Retail Group (HRG)’s major shareholders are demanding a minimum 200p-per-share offer if J Sainsbury wants to acquire the UK-based company, which owns retailers Homebase and Argos, The Sunday Times reported. That level of bid equates to more than GBP 1.6bn (USD 2.3bn), or GBP 500m more than UK-based supermarket chain Sainsbury is believed to have offered in November with an approach of approximately 136p per share, the report said.
Cato Stonex from Taube Hodson Stonex, one of HRG’s top 20 investors, was quoted stating that Sainsbury might succeed with a bid of more than 200p and possibly as much as 220p per share.
Richard Buxton from Old Mutual Global Investors, which is a top 10 HRG investor, said any bid from Sainsbury would have to be worth at least 200p per share, while another, unidentified, shareholder said it was “quite easy” to reach a valuation above 200p if one believes HRG has a future.
Sainsbury’s initial offer, which was made public last week without revealing the terms, was rejected but a new bid could come within the next few days, the report said, noting that both companies are scheduled to announce their Christmas trading figures this week. According to a person with close links to the board of Sainsbury, a deal has less than a 50% chance of success, although a revised approach is expected, The Sunday Telegraph reported.
An industry insider cited in the Times report said the 200p-per-share figure is completely unrealistic and such expectations might scupper any chance of a deal. However, Cantor Fitzgerald analysts suggested a break-up of HRG might generate a much higher value, the report said.
Sainsbury is thought likely to dispose of the Homebase operation if its HRG takeover succeeds and the UK-listed retailer Dunelm has already discussed the acquisition of Homebase with private equity companies, the item reported.
Sunday Times, Sunday Telegraph