Home retail shares jump as takeover be­comes $2b con­test

The Pak Banker - - BUSINESS -

Home Retail Group Plc shares rose in early trad­ing af­ter a takeover of the Ar­gos stores owner turned into a 1.4 bil­lion­pound ($2 bil­lion) con­test.

Stein­hoff In­ter­na­tional Hold­ings Ltd., the owner of Con­forama fur­ni­ture stores in France and Ben­sons Beds in the U.K., said late Fri­day it plans to make a 175 pence-a-share cash of­fer for the Bri­tish re­tailer, top­ping a bid from su­per­mar­ket chain J Sains­bury Plc.

Home Retail gained as much as 12 per­cent to 172.5 pence, the high­est since July 3. Stein­hoff's bid came days be­fore Tues­day's dead­line for Sains­bury to make a for­mal pro­posal, hav­ing pre­vi­ously reached agree­ment on the terms of a cas­hand-share of­fer worth about 167 pence a share. The gro­cer now needs to raise its bid if it wants to win the con­test.

"Stein­hoff cer­tainly looks like a se­ri­ous bid­der," Bruno Monteyne, an an­a­lyst at San­ford C. Bern­stein, said in a note. "Sains­bury's might be keen to avoid a bid­ding war, but we would ex­pect them to match the Stein­hoff bid, and hope that the fact they are fur­ther down the line on due dili­gence will mean the board will ac­cept their of­fer." Sains­bury has yet to for­mally re­spond to Stein­hoff's pro­posal. An­a­lysts at Ex­ane BNP Paribas said they ex­pect the gro­cer to come back with a higher of­fer. The shares fell 0.9 per­cent to 258.7 pence in early Lon­don trad­ing.

The bid­ders are vy­ing for con­trol of a busi­ness that op­er­ates more than 800 Ar­gos shops sell­ing ev­ery­thing from jew­elry to tele­vi­sions. 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. Stein­hoff gained as much as 4.6 per­cent to 4.71 euros in Frank­furt, where the com­pany has had its pri­mary list­ing since De­cem­ber. The list­ing was moved from Jo­han­nes­burg to re­flect the grow­ing im­por­tance of Europe to a com­pany that's now based in Am­s­ter­dam and has a mar­ket value of about 18 bil­lion euros ($20 bil­lion).

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