• Waiving preconditions allows grocer to `go hostile': analyst
  • Steinhoff trumped Sainsbury's bid for Home Retail Feb. 19

J Sainsbury Plc signaled that it’s not giving up in its pursuit of Home Retail Group Plc after Steinhoff International Holdings Ltd. trumped its advance on the Argos owner.

The grocer said Thursday it could waive preconditions to making an offer, such as completing due diligence and getting a recommendation from Home Retail’s board. It had made those stipulations when it announced that it had agreed terms to acquire Home Retail in an offer valued at 1.4 billion pounds ($2 billion), which Steinhoff bested with a higher all-cash proposal. There’s no guarantee the retailer will make a bid even if those preconditions are met or waived, Sainsbury said.

The announcement “gives Sainsbury scope to go hostile and pitch direct to Home Retail’s shareholders,” John Kershaw, an analyst at Exane BNP Paribas, said in a note. “Beating Steinhoff’s possible cash bid will be difficult, so we think Sainsbury wants scope to pitch the attraction of its equity story to shareholders in the event that the board of Home Retail doesn’t share Sainsbury’s view.”

A Sainsbury’s representative said its statement came at the behest of the U.K. Takeover Panel. The company has until March 18 to either make a formal offer or walk away under British takeover rules.

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