Steinhoff Counters Sainsbury With $2 Billion Home Retail Bid

  • Cash offer values owner of Argos stores at 175 pence a share
  • Sainsbury earlier agreed to pay 161.3 pence in cash and stock

Steinhoff International Holdings Ltd. made a 1.4 billion-pound ($2 billion) counter bid for Britain’s Home Retail Group Plc, taking on J Sainsbury Plc for control of the Argos stores owner.

The all-cash proposal values each Home Retail share at 175 pence, Steinhoff said in a statement after European markets closed Friday. That’s more than the 161.3 pence a share in cash and stock that Sainsbury agreed to pay earlier this month.

Steinhoff unexpectedly entered the fray just days before a Feb. 23 deadline for Sainsbury to make a formal offer, seeking to gain control over more than 800 shops selling everything from jewelry to televisions. The furniture retailer switched its primary listing from Johannesburg to Frankfurt in December, reflecting Europe’s increased importance to a company that’s now based in Amsterdam.

Home Retail confirmed it received the approach, which it said it’s reviewing. Steinhoff said it’s seeking a recommendation from the U.K. company and has a deadline of March 18 to make a formal bid under British takeover rules.

European Presence

Home Retail would further increase Steinhoff’s presence in Europe, where it gets more than half its 135 billion rand ($8.8 billion) of sales from operations in the U.K., France and Germany. Founded in Germany in 1964, the business listed in Johannesburg a year after the 1997 acquisition of a stake in a South African furniture company.

A takeover of Home Retail would be Steinhoff’s biggest since it bought South African clothing retailer Pepkor Holdings Pty Ltd. for 62.8 billion rand in 2014. It would also represent a departure from recent comments by Chief Executive Officer Markus Jooste that the company is focused on expanding its existing brands, rather than making acquisitions.

Steinhoff said its offer comprises 147.2 pence a share in cash, plus a 2.8 pence dividend and 25 pence to reflect Home Retail’s sale of the Homebase U.K. home-improvement chain to Australia’s Wesfarmers.

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