J Sainsbury expected to submit fresh offer for Home Retail Group; HRG shareholders Toscafund and Schroders see merit of Sainsbury bid; Homebase could go if takeover proceeds
J Sainsbury [LON:SBRY] is expected to submit a fresh takeover bid for Home Retail Group [LON:HOME], The Times reported. The newspaper cited market speculation, which followed J Sainsbury's disclosure yesterday, 5 January that it had approached HRG about a potential offer. HRG rebuffed the offer, the UK-based supermarket group said.
Bankers cited by the report said Sainsbury’s approach could prompt rival bidders to come forward. The bankers thought that a bidder would need to offer more than GBP 1.1n (EUR 1.50bn) to be given serious consideration.
Separately, HRG shareholders Toscafund and Schroders see some merit in Sainsbury’s offer, The Daily Mail reported. The report quoted Toscafund founder Martin Hughes, who said HRG’s leading investors are receptive to Sainsbury’s offer. Hughes added that HRG shareholders are unhappy at the lack of consultation with the HRG board before it rejected Sainsbury’s approach. Toscafund holds a 5.08% stake in HRG, the item said.
it is thought that Toscafund and Schroders, HRG’s biggest investor with a stake of 18.6% are both unhappy with HRG’s board, The Daily Mail item added.
The Guardian reported that the hedge funds Newbrook Capital Advisors, WorldQuant and Odey Asset Management had all taken out short positions in HRG and had taken heavy losses on their bets yesterday due to the surge in HRG's share price after Sainsbury's approach was announced.
Separately, an online Daily Telegraph report cited unspecified sources who said the Australian gardening supplies retailer Wesfarmers had discussions in December 2015 about a possible offer for Homebase, HRG's DIY retailing arm. The private equity firms Apax Partners and Apollo Global Management were also believed to be interested in Homebase last year, the item said.
The Times' main report said Dunelm and French DIY retailer Leroy Merlin have previously been mentioned as potential buyers for Homebase.
Home Retail Group’s share price closed 40.6p up at 139.3p in London yesterday, giving the company a market capitalisation of GBP 1.13bn.