Sainsbury’s plans hit by rival Home Retail bid

South Africa’s Steinhoff group raises stakes by offering £111m more than British supermarket giant

J SAINSBURY’S plans to acquire Home Retail Group have been thrown into disarray following a surprise rival £1.4bn approach from South African retail group Steinhoff.

Steinhoff, which owns UK furniture retailer Harveys and Bensons for Beds, has mooted an indicative approach worth 175p a share for the Argos owner, around £111m more than the offer made by the supermarket.

The new approach offers a 147.2p-ashare cash payment on top of the 25p-ashare proceeds Home Retail Group was to hand its shareholders from its sale of Homebase and a 2.8p final dividend.

The rival bidder has said it was supportive of Home Retail Group’s sale of Homebase to Wesfarmers, which will return £200m to shareholders.

Steinhoff ’s approach offers investors 8.5pc more money than Sainsbury’s £1.3bn bid, which is worth 161.3p a share. The supermarket’s proposal is made up of a 55p cash payment, 0.321 Sainsbury’s shares and boosted with the payments from the Homebase sale.

Steinhoff is listed on the Frankfurt and Johannesburg stock markets with a market value of €18bn (£13bn), giving it significantly more financial muscle than Sainsbury’s, which is valued at £5bn.

Christo Wiese, the South African billionaire who last year engineered the takeover of Virgin Active and fashion chain New Look, owns a 20pc stake in Steinhoff. He was handed the stake after selling Pekor, Africa’s largest retail chain, to the company in a $5.7bn (£3.9bn) deal in 2014.

Mr Wiese has shown an enthusiasm for British retail, recently upping his stake in Iceland Foods and launching budget fashion chain Pep & Co with former Asda boss Andy Bond.

Sainsbury’s had been working towards a bid deadline of February 23 and it is unclear whether the grocer’s board will attempt to match Steinhoff ’s offer or abandon its pursuit.

Mike Coupe, Sainsbury’s chief executive, struck the deal as a way of futureproofing the retailer for the digital era. However, he had been previously been warned by investors not to overpay for Home Retail.

Home Retail last night acknowledged the approach from Steinhoff.

A spokesman said the board was reviewing the proposals and would make an announcement in due course, telling shareholders to take no action as there can be no certainty of a firm bid.

Under Takeover Panel rules, Steinhoff has until 5pm on March 18 to make a firm offer or walk away.