HOME - Interesting times
Next week is a crucial time for HOME the owners of Argos and Homebase, after the RNS announcement from Sainsbury on Tuesday that their offer in November for Home was rejected by the board of directors.
First up on Wed 13th is the third quarter trading statement from Sainsbury’s followed the next day by Homes Q3 statement.
It seems very clear to me that Sainsbury will be making a second approach, they have until the second of Feb effectively to put up or shut up. The announcement itself would serve no purpose if a second bid was not going to happen. By making the announcement they are effectively probing both Home and their own shareholders for approval.
We know that Sainsbury have been trialling Argos click and collect in some of their stores in 2015, given the bid approach it is clear that these stores have benefited from this venture. The benefits of combining the two companies were given in Tuesdays RNS…..
Create a food and non-food retailer of choice for customers, building on the strong heritages of both businesses whose brands are renowned for trust, quality, value and customer service;
Deliver profitable sales growth by offering customers the right combination of location, range, speed and flexibility, across a wide range of products;
Bring together multi-channel capabilities and delivery networks for fast, flexible and reliable delivery to store or to home across a wide range of food and non-food products;
Optimise the use of their combined retail space. The combined entity would have attractively located stores across the UK, with an enhanced supply and delivery network and a strong presence across food and grocery, clothing, homewares, toys, stationery, electricals, furniture and other general merchandise;
Create a financial services proposition that will provide a wider range of customer-centric services including credit cards, loans, deposits, insurance and ATMs;
Deliver revenue synergy potential through the ability to sell to each other's customers, including the operation of Argos concessions within Sainsbury's stores, and the sale of Sainsbury's products and services through Argos's network;
Provide additional cost synergy potential through property rationalisation, scale benefits and operational efficiencies.
Note that there is no reference to Homebase here so we can expect it to be sold off…
Share price is on the move this morning, (Monday 11th) I'm guessing the city are thinking a further bid is due. I believe Homebase will be sold to another 3rd party and that the pursuit for Argos will continue. I'm not sure what happens to Habitat. This week is very exciting with 3rd qtr trading statements for Sainsbury and Home retail due on Wednesday and Thursday respectively.
