Sainsburys biggest investor warming to Argos buy

According to reports in the UK media, the biggest single investor in the grocery chain Sainsburys, the Qatar Investment Authority (QIA) is warming to the idea of the supermarket chain’s proposed bid for the Home Retail Group (HRG).

The Times and Guardian newspapers this week have reported that the QIA, that holds a 25% stake in the supermarket chain, has come round to supporting the buy out of the home retail chain. HRG owns the homewares company Argos and until last week the DIY chain Homebase that it divested to an Australian DIY chain. The QIA is said to be favourable to the takeover as long as it does not overpay for the company. The Guardian reported that the limit the QIA has in mind would be around £1.4 billion.

Apex Insight has reported the initial approach of Sainsburys to HRG and its rebuttal, as well as the divestment of Homebase to Australian company Wesfarmers for £340 million. It is understood that Sainsburys wants to take on the Argos chain after it launched its Fast Track delivery option to customers. Sainsburys seems to be lining up to take on Amazon as it moves into groceries.

Apex Insight also reported last week that Amazon may buy up the online grocery chain Ocado in a bid to sell more than its Amazon Pantry line does at present. This would let the company compete directly with the major grocery chains such as Sainsburys and Tesco where they out compete Amazon at present. Sainsburys buying up Argos would enable the new company to take on Amazon in its core business of homewares and gadgets as well as selling its traditional lines of groceries through its successful home delivery network. We will report as soon as the news is out when any future move takes place by Sainsburys.