REG - Sainsbury(J) PLC Home Retail Grp Plc - Offer for Home Retail Group plc <Origin Href="QuoteRef">HOME.L</Origin> <Origin Href="QuoteRef">SBRY.L</Origin> - Part 2

J SainsburyAnnouncement

19/03/2016 16:17

- Part 2: For the preceding part double click  ID:nRSR6453Sa 

including the rye
loaf and sprouting grain boule, both of which are high in fibre. 
 
Our promotional participation levels continue to reduce year-on-year, running
at an average of 28 per cent for the quarter. Customers have told us that
multi-buy promotions do not meet their shopping needs today. They are often
viewed as confusing, create storage challenges and unnecessary waste. In
response to this, we recently announced that we will be phasing out the vast
majority of our multi-buy promotions across grocery products by August this
year. We will continue to simplify our trading strategy in favour of lower
regular prices. We are also committed to reducing waste and in January we
launched our Waste less, Save more initiative in Swadlincote, Derbyshire. The
town will receive £1 million to trial the latest technology and innovations in
reducing household waste. 
 
Our in-store operational metrics for service and availability remain excellent
and are beating our internal targets. Year-to-date we have won 16 Grocer 33
Service & Availability awards, ahead of our run-rate in the previous year. We
opened 16 convenience stores including our second micro store in Richmond.
Groceries online sales grew at nearly 14 per cent and orders by nearly 19 per
cent. We simplified our online nectar redemption process, making it easier for
customers to redeem their points, and improving the online customer
experience. 
 
Clothing delivered over ten per cent growth and we introduced our 22nd Gok Wan
collection which had its best ever February launch. Entertainment also
performed well, with nearly 11 per cent growth driven by some big releases in
the quarter. Sainsbury's Bank continued its good performance with 15 per cent
volume growth in Insurance new business and 12 per cent growth in Travel Money
in-store transaction volumes. 
 
We have traded well this year and are making excellent progress implementing
our strategy. The market will remain competitive but we are confident that we
will continue to outperform our major peers." 
 
Sainsbury's Profit Estimate 
 
The Sainsbury's Group made a statement at the time of its second quarter
trading statement for the 16 weeks to 26 September 2015, announced on 30
September 2015, that should current market trends continue, it expected its
full year (that is, for the 52 weeks ended 12 March 2016) underlying profit
before tax (defined as profit before tax before any profit or loss on the
disposal of properties, investment property fair value movements, retailing
financing fair value movements, IAS 19 pension financing element and defined
benefit pension scheme expenses, acquisition adjustments and one-off items
that are material and infrequent in nature, but after the coupons on the
perpetual subordinated capital securities and perpetual subordinated
convertible bonds) ("UPBT") to be moderately ahead of its published consensus
profit (which, at the time of such announcement, was £548 million) (the
"Sainsbury's Profit Estimate"). The Sainsbury's Directors have considered the
Sainsbury's Profit Estimate and confirm that it remains valid as at the date
of this announcement. 
 
The above statement constitutes a profit estimate for the purposes of Rule 28
of the Takeover Code. 
 
Pursuant to Rule 28.1(c) of the Takeover Code, the Sainsbury's Profit Estimate
is set out in full in Appendix 4 to this announcement, together with the basis
of preparation and confirmations by the Sainsbury's Directors. 
 
11.       Management, employees and locations 
 
Both Sainsbury's and HRG have large numbers of committed and talented
colleagues who work hard to ensure that customers receive the best possible
levels of customer service and quality. The Sainsbury's Board recognises how
important such colleagues are to the success of the Combined Group. 
 
HRG's scale, multi-channel expertise and competency across a broad range of
general merchandise product markets as well as its consumer financial services
is highly complementary to Sainsbury's non food expertise in clothing and
general merchandise. Sainsbury's therefore anticipates that the future
leadership team will be comprised of senior leaders from both HRG and
Sainsbury's, with a view to retaining HRG's expertise in digital, channels,
product markets and financial services. The leadership team will be determined
in due course and in consultation with HRG's senior leadership. 
 
In order to achieve some of the expected benefits of the combination of the
Sainsbury's Group and the HRG Group, it will be necessary to perform a
detailed review of how best to combine the two groups.  The synergy work
carried out to date has confirmed the potential to generate cost savings for
the Combined Group in areas such as reducing headcount in overlapping
corporate and support functions where there may be duplication. However, at
this stage Sainsbury's has not yet fully developed proposals as to how such
headcount reductions will be implemented. 
 
Integration planning has begun but more detailed consideration will need to be
undertaken and will be subject to engagement and (if applicable) consultation
with appropriate stakeholders, including employee representative bodies and
unions in accordance with Sainsbury's legal obligations. Sainsbury's intends
that there will be a dedicated team responsible for leading the integration
and that this team will be made up of individuals from both HRG and
Sainsbury's. 
 
Sainsbury's confirms that the existing contractual and statutory employment
rights, including pension rights, of all employees of Sainsbury's and HRG will
be fully observed following Completion. Further information in respect of
employees and pensions will be set out in the Offer Document. 
 
No proposals have yet been made on the terms of any incentivisation
arrangements for relevant employees or managers. 
 
12.       Pension arrangements 
 
Sainsbury's and the trustee of the Home Retail Group Pension Scheme (the "HRG
Trustee") have reached an agreement in relation to the future funding of the
Home Retail Group Pension Scheme, the terms of which will take effect
conditional on Completion. The key terms are: 
 
·          An agreed basis for the statutory valuation in relation to the Home
Retail Group Pension Scheme as at 31 March 2015; an increase in the level of
deficit contributions payable by Argos under the Home Retail Group Pension
Scheme's statutory schedule of contributions (to £40 million per annum,
payable quarterly); and a lump sum payment of £50 million, to be made
following Completion. (These contributions are in addition to the lump sum
contributions totalling £50 million agreed by HRG with the HRG Trustee in
connection with the Homebase Sale, £26 million of which has already been paid
to the Home Retail Group Pension Scheme.) 
 
·          A commitment from Sainsbury's to stand behind Argos' obligations
under the statutory schedule of contributions and to make a lump sum payment
to the Home Retail Group Pension Scheme (of up to £470 million) if there is an
insolvency of Sainsbury's or Argos. This commitment will replace similar
commitments currently in place from HRG (which will fall away on Completion)
and, subject to certain conditions, will be reset at the next two statutory
valuations in relation to the scheme (expected to have effective dates in 2018
and 2021). 
 
·          The grant of an additional £37.5 million of security over freehold
assets in favour of the HRG Trustee (resulting in £75 million in total,
inclusive of the £37.5 million of security agreed with HRG in the connection
with the Homebase Sale). 
 
Sainsbury's understands that the Home Retail Group Pension Scheme is closed to
the future accrual of benefits. Sainsbury's has no intention to re-open the
scheme to benefit accrual or new entrants. 
 
The HRG Trustee has confirmed to Sainsbury's in writing that, having taken
advice, it is satisfied that it does not consider the Offer, on the terms
described herein, to be materially detrimental to the financial support in
place for the Home Retail Group Pension Scheme. 
 
13.       Confidentiality Agreement 
 
Sainsbury's and HRG have entered into a confidentiality agreement dated 3
February 2016 pursuant to which each of Sainsbury's and HRG has undertaken to
keep certain information relating to the other party confidential and not to
disclose such information to third parties, except to certain permitted
disclosees for the purposes of evaluating the Offer, the pension trustees of
Sainsbury's and HRG, or if required by applicable laws or regulations. 
 
The confidentiality obligations of each party under the Confidentiality
Agreement will terminate upon the Offer becoming or being declared
unconditional in all respects or, in the event that the Offer does not become
unconditional in all respects, the date that is six months after the Offer
lapses or is withdrawn. 
 
14.       HRG Employee Share Plans 
 
Sainsbury's will make appropriate proposals to participants in the HRG
Employee Share Plans in due course. Participants in the HRG Employee Share
Plans will be contacted separately regarding the effect of the Offer on their
rights under the HRG Employee Share Plans and with the details of Sainsbury's
appropriate proposals. Further details of the terms of such proposals will be
included in the Offer Document. 
 
The Offer will extend to any HRG Shares which are unconditionally allotted,
issued or transferred to satisfy the exercise of existing options or vesting
of awards under the HRG Employee Share Plans prior to the date on which the
Offer closes for acceptance (or such earlier date as Sainsbury's may, subject
to the Takeover Code or with the consent of the Panel, decide). 
 
The participants in the HRG Share Incentive Plan will be treated in the same
way as the other HRG Shareholders. 
 
15.       Dividends and dividend policy 
 
The Sainsbury's Directors expect that, following Completion, the Combined
Group will pay dividends in line with Sainsbury's existing dividend policy of
two times cover. 
 
16.       Disclosure of interests in HRG Group 
 
Sainsbury's made a public Opening Position Disclosure in respect of the
interests in the relevant securities of HRG held by Sainsbury's and its
concert parties on 19 January 2016 (the "Sainsbury's Opening Position
Disclosure"). As set out in the Sainsbury's Opening Position Disclosure, a
close relative of David Tyler, the Chairman of Sainsbury's, holds 355 HRG
Shares. 
 
Save as disclosed in this announcement and in the Sainsbury's Opening Position
Disclosure, as at 16 March 2016, none of Sainsbury's nor, so far as
Sainsbury's is aware, any person acting or deemed to be acting in concert with
Sainsbury's had: 
 
(a)        any interest in, or right to subscribe for, any relevant securities
of HRG; 
 
(b)        any short position in (whether conditional or absolute and whether
in the money or otherwise), including any short position under a derivative,
any agreement to sell or any delivery obligation or right to require another
person to purchase or take delivery of, any relevant securities of HRG; or 
 
(c)        borrowed or lent, or entered into any financial collateral
arrangements or dealing arrangements in respect of, any relevant securities of
HRG. 
 
17.       Conditions 
 
The Offer will be subject to the Conditions and certain further terms as set
out in Appendix 1 to this announcement and to the full terms and conditions
which will be set out in the Offer Document and the Form of Acceptance. The
Conditions include, amongst other things: (i) valid acceptances having been
received in respect of not less than 90 per cent. (or such lesser percentage
as Sainsbury's may decide) of the HRG Shares to which the Offer relates and of
the voting rights attached to those shares; and (ii) regulatory clearances
being received from the FCA, the GFSC and the CMA. 
 
18.       Squeeze-out, delisting, cancellation of trading and re-registration 
 
If Sainsbury's receives acceptances under the Offer in respect of, and/or
otherwise acquires, 90 per cent. or more of the HRG Shares by nominal value
and voting rights attaching to such shares to which the Offer relates,
Sainsbury's intends to exercise its rights pursuant to the provisions of
Chapter 3 of Part 28 of the 2006 Act to squeeze-out the remaining HRG Shares
in respect of which the Offer has not been accepted. 
 
After the Offer becomes or is declared unconditional in all respects and
Sainsbury's has by virtue of its shareholdings and acceptances of its Offer
acquired, or agreed to acquire, issued share capital carrying at least 75 per
cent. of the voting rights of HRG, Sainsbury's intends to procure the making
of an application by HRG for cancellation, respectively, of the trading in HRG
Shares on the London Stock Exchange's main market for listed securities and of
the listing of HRG Shares on the Official List. A notice period of not less
than 20 Business Days prior to the cancellation will commence either on the
date on which Sainsbury's has obtained 75 per cent. or more of the voting
rights as described above or on the first date of issue of squeeze-out notices
under Chapter 3 of Part 28 of the 2006 Act. Delisting would significantly
reduce the liquidity and marketability of any HRG Shares not assented to the
Offer. 
 
It is also proposed that, following the Offer becoming unconditional in all
respects and after the HRG Shares are delisted, HRG will be re-registered as a
private company under the relevant provisions of the 2006 Act. 
 
19.       Prospectus 
 
Sainsbury's will be required to produce the Prospectus in connection with the
issue of the New Sainsbury's Shares. The Prospectus will contain information
relating to the Sainsbury's Group, the HRG Group and the New Sainsbury's
Shares. The Prospectus will be published at or around the same time as the
Offer Document is posted to HRG Shareholders. 
 
20.       Admission to the Official List and to trading on the London Stock
Exchange and dealings in New Sainsbury's Shares 
 
Application will be made to the FCA and the London Stock Exchange for the New
Sainsbury's Shares to be admitted to the premium segment of the Official List
and to trading on the London Stock Exchange's main market for listed
securities, respectively.  It is expected that Admission will become effective
and that dealings for normal settlement in the New Sainsbury's Shares will
commence on the London Stock Exchange at 8.00 a.m. on the first Business Day
following the date on which the Offer becomes or is declared unconditional in
all respects. 
 
21.       Fractional entitlements 
 
Fractions of New Sainsbury's Shares will not be allotted or issued to HRG
Shareholders and entitlements will be rounded down to the nearest whole number
of New Sainsbury's Shares and all fractions of New Sainsbury's Shares will be
aggregated and sold in the market as soon as practicable after the Offer
becomes or is declared unconditional in all respects. The net proceeds of such
sale (after deduction of all expenses and commissions incurred in connection
with the sale) will be distributed in due proportions to HRG Shareholders who
would otherwise have been entitled to such fractions, save that individual
entitlements to amounts of less than £5 will be retained for the benefit of
the Combined Group. 
 
22.       Documents on website and availability of hard copies 
 
Copies of the following documents required to be published pursuant to Rule
26.2 of the Takeover Code will be published on Sainsbury's website at
http://www.j-sainsbury.co.uk/investor-centre/disclaimer/ by no later than noon
(London time) on the Business Day following this announcement: 
 
(a)        this announcement; 
 
(b)        the Confidentiality Agreement; and 
 
(c)        the Amendment and Restatement Agreement. 
 
23.       Overseas shareholders 
 
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK and the availability of the Offer to HRG
Shareholders who are not resident in the UK or who are subject to the laws
and/or regulations of another jurisdiction (including the ability of such HRG
Shareholders to accept the Offer and/or to execute and deliver a Form of
Acceptance) may be restricted by the laws and/or regulations of those
jurisdictions. Therefore any persons who are not resident in the UK or who are
subject to the laws and/or regulations of any jurisdiction other than the UK
should inform themselves about, and observe, any applicable legal or
regulatory requirements. HRG Shareholders who are in any doubt regarding such
matters should consult an appropriate independent professional adviser in the
relevant jurisdiction without delay. 
 
24.       Reserving the right to proceed by way of a Scheme 
 
Sainsbury's reserves the right to implement the Acquisition by way of a Scheme
(with the consent of the Panel). In such an event, the terms of the
Acquisition would be substantially the same as those of the Offer, subject to
appropriate amendments, including that the Homebase Payment and the Additional
HRG Payment would be structured as return of capital (the "Proposed Capital
Returns") rather than a Special Dividend. The Acquisition would be implemented
by way of a three-step process as follows: 
 
·        Step 1: Under the terms of the Scheme, all HRG Shares would be
cancelled in consideration for which HRG Shareholders would receive newly
issued shares in a newly incorporated company ("New TopCo" and "New TopCo
Shares"). 
 
·        Step 2: Following the Scheme becoming effective, New TopCo's share
capital would be reduced through a Court procedure (the "New TopCo Capital
Reduction") and the Proposed Capital Returns would be paid to New TopCo
shareholders (i.e. former HRG Shareholders). 
 
·        Step 3: Upon the New TopCo Capital Reduction becoming effective, the
New TopCo Shares would be transferred to Sainsbury's pursuant to mandatory
transfer provisions under the articles of association of New TopCo, in
consideration for the Offer Consideration. 
 
The precise steps of the Scheme and the New TopCo Capital Reduction would be
set out in the Scheme Document. Sainsbury's reserves the right to implement
the Acquisition by way of a transfer scheme under Part 26 of the 2006 Act or
through different steps and processes (with the consent of the Panel, if
required). 
 
25.       General 
 
The HRG Shares will be acquired pursuant to the Offer with full title
guarantee, fully paid and free from all liens, charges, equities,
encumbrances, rights of pre-emption and any other interests of any nature
whatsoever and together with all rights now or hereafter attaching thereto,
including without limitation voting rights and the right to receive and retain
in full all dividends and other distributions (if any) declared, made or paid
on or after the date of this announcement, other than the Special Dividend. 
 
If any dividend or other distribution is announced, declared, made, paid or
becomes payable by HRG in respect of the HRG Shares on or after the date of
this announcement and prior to the date on which the Offer becomes or is
declared unconditional in all respects, other than or in excess of the Special
Dividend, Sainsbury's reserves the right to reduce the value of the Offer
Consideration (including, for the avoidance of doubt, by reducing the cash
element of the Offer Consideration and/or adjusting the Exchange Ratio) by the
amount of all or part of the dividend or other distribution, or all or part of
the amount in excess of the Special Dividend, that has been announced,
declared, made, paid or become payable. In calculating the amount of any such
reduction, the value of New Sainsbury's Shares will be calculated by reference
to the Closing Price of Sainsbury's Shares on the last trading day before
Sainsbury's announcement of a reduction in the Offer Consideration. 
 
The New Sainsbury's Shares will be issued credited as fully paid and will rank
pari passu in all respects with the Existing Sainsbury's Shares from the date
of issue, save that they will not participate in any dividend payable by
Sainsbury's with reference to a record date prior to the date on which the
Offer becomes or is declared unconditional in all respects. 
 
This announcement is not intended and does not constitute, or form part of,
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant to the
Offer or otherwise. The New Sainsbury's Shares are not being offered to the
public by means of this announcement. HRG Shareholders are advised to read
carefully the Prospectus, the Offer Document and (in respect of HRG
Shareholders who hold HRG Shares in certificated form) the Form of Acceptance
once these have been despatched. Any decision in respect of the Offer and
related matters should be made only on the basis of the information contained
in the Offer Document and the Prospectus. 
 
The New Sainsbury's Shares to be issued pursuant to the Offer have not been,
and will not be, listed on any stock exchange other than the London Stock
Exchange and have not been, and will not be, registered under the US
Securities Act or under any laws or with any securities regulatory authority
of any state, district or other jurisdiction, of the United States, nor have
clearances been, nor will they be, obtained from the securities commission or
similar authority of any province or territory of Canada and no prospectus has
been, or will be, filed, or registration made, under any securities law of any
province or territory of Canada, nor has a prospectus in relation to the New
Sainsbury's Shares been, nor will one be, lodged with, or registered by, the
Australian Securities and Investments Commission, nor have any steps been
taken, nor will any steps be taken, to enable the New Sainsbury's Shares to be
offered in compliance with applicable securities laws of Japan and no
regulatory clearances in respect of the New Sainsbury's Shares have been, or
will be, applied for in any other jurisdiction. Accordingly, unless an
exemption under relevant securities laws is available, the New Sainsbury's
Shares are not being, and may not be, offered, sold, resold, delivered or
distributed, directly or indirectly, in, into or from the United States or any
other Restricted Jurisdiction or any resident of the United States or any
other Restricted Jurisdiction. Neither the SEC nor any US state securities
commission has approved or disapproved of the New Sainsbury's Shares, or
determined if this announcement is accurate or complete. Any representation to
the contrary is a criminal offence. 
 
The Offer will be subject to the Conditions and other terms as set out in
Appendix 1 to this announcement, and to the full terms and conditions which
will be set out in the Offer Document and the Form of Acceptance.  The Offer
Document, containing further information about the Offer and the expected
timetable and (in respect of HRG Shareholders who hold HRG Shares in
certificated form) the Form of Acceptance will be despatched to HRG
Shareholders within 28 days of the date of this announcement or such later
date as Sainsbury's decides, with the consent of the Panel. It is expected
that the Prospectus, containing further information in relation to the New
Sainsbury's Shares, will be published by Sainsbury's on or around the same
time. 
 
Morgan Stanley, UBS and Deloitte have each given and not withdrawn their
consent to the publication of this announcement with the inclusion herein of
the references to their names in the form and context in which they appear. 
 
Morgan Stanley and UBS are acting as financial advisers to Sainsbury's for the
purposes of the Offer. Clifford Chance LLP is acting as legal adviser to
Sainsbury's. Deloitte is acting as reporting accountants to Sainsbury's. 
 
Enquiries 
 
Sainsbury's 
 
Duncan Cooper, Investor Relations                                           
Tel: +44 (0) 20 7695 4740 
 
Louise Evans/Anna Harland, Media Relations                             Tel:
+44 (0) 20 7695 7295 
 
Brunswick (PR Adviser to Sainsbury's) 
 
Katie Ioanilli/Mike Smith                                                     
      Tel: +44 (0) 20 7404 5959 
 
Morgan Stanley (Financial Adviser to Sainsbury's) 
 
Paul Baker                                                                    
           Tel: +44 (0) 20 7425 8000 
 
Ian Hart 
 
Nick Bishop 
 
UBS (Financial Adviser to Sainsbury's) 
 
Hew Glyn Davies                                                               
      Tel: +44 (0) 20 7567 8000 
 
Anna Richardson Brown 
 
Further information 
 
This announcement is for information purposes only. It is not intended to and
does not constitute, or form part of, any offer, invitation or the
solicitation of an offer to purchase, otherwise acquire, subscribe for, sell
or otherwise dispose of any securities, or the solicitation of any vote or
approval in any jurisdiction, pursuant to the Offer or otherwise, nor shall
there be any sale, issuance or transfer of securities of Sainsbury's or HRG
pursuant to the Offer or otherwise in any jurisdiction in contravention of
applicable law. The Offer will be made solely by means of the Offer Document,
which will contain the full terms and conditions of the Offer, including
details of how to accept the Offer. 
 
Sainsbury's will prepare and publish the Prospectus containing information
about the New Sainsbury's Shares. Sainsbury's urges HRG Shareholders to read
the Offer Document and the Prospectus carefully when they become available
because they will contain important information in relation to the Offer and
the New Sainsbury's Shares. Any decision in respect of the Offer or other
response in relation to the Offer should be made only on the basis of the
information contained in the Offer Document (or, in the event that the Offer
is to be implemented by means of a Scheme, the Scheme Document) and the
Prospectus. 
 
This announcement is an advertisement and does not constitute a prospectus or
prospectus equivalent document. 
 
Important notices relating to financial advisers 
 
Morgan Stanley & Co. International plc ("Morgan Stanley"), which is authorised
by the Prudential Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority in the United Kingdom, is
acting as financial adviser to Sainsbury's and no-one else in connection with
the Offer or any other matter referred to herein. In connection with such
matters, Morgan Stanley, its affiliates and their respective directors,
officers, employees and agents will not regard anyone other than Sainsbury's
as their client, nor will they be responsible to any other person for
providing the protections afforded to their clients or for providing advice in
relation to the Offer, the contents of this announcement or any other matter
referred to herein. 
 
UBS Limited ("UBS") which is authorised by the Prudential Regulation Authority
and regulated by the Financial Conduct Authority and the Prudential Regulation
Authority in the UK is acting as joint financial adviser to Sainsbury's and no
one else in connection with the matters set out in this announcement. In
connection with such matters, UBS, its affiliates, and its or their respective
directors, officers, employees and agents will not regard any other person as
their client, nor will they be responsible to anyone other than Sainsbury's
for providing the protections afforded to their clients or for providing
advice in relation to the contents of this announcement or any other matter
referred to herein. 
 
Overseas jurisdictions 
 
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK and the availability of the Offer to HRG
Shareholders who are not resident in the UK or who are subject to the laws
and/or regulations of another jurisdiction (including the ability of such HRG
Shareholders to accept the Offer and/or to execute and deliver a Form of
Acceptance) may be restricted by the laws and/or regulations of those
jurisdictions. Therefore any persons who are not resident in the UK or who are
subject to the laws and/or regulations of any jurisdiction other than the UK
should inform themselves about, and observe, any applicable legal or
regulatory requirements. Any failure to comply with the applicable
restrictions may constitute a violation of the laws and/or regulations of any
such jurisdiction. To the fullest extent permitted by applicable law, the
companies and persons involved in the Offer disclaim any responsibility or
liability for the violation of such restrictions by any person. 
 
This announcement has been prepared for the purposes of complying with English
law, the Listing Rules, the rules of the London Stock Exchange and the
Takeover Code and the information disclosed may not be the same as that which
would have been disclosed if this announcement had been prepared in accordance
with the laws and/or regulations of jurisdiction outside the UK. 
 
Unless otherwise determined by Sainsbury's or required by the Takeover Code,
and permitted by applicable law and regulation, the Offer will not be made,
directly or indirectly, in, into or from or by the use of mails or any other
means or instrumentality (including, but not limited to, facsimile, e-mail or
other electronic transmission, telex or telephone) of interstate or foreign
commerce of, or of any facility of a national state or other securities
exchange of the United States or any other Restricted Jurisdiction and the
Offer may not be capable of acceptance by any such use, means, instrumentality
or facilities or from within the United States or any other Restricted
Jurisdiction. Accordingly, unless otherwise determined by Sainsbury's or
required by the Takeover Code, and permitted by applicable law and regulation
copies of this announcement and any formal documentation relating to the Offer
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in, into or from the United States or any other
Restricted Jurisdiction and persons receiving such documents (including
agents, custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send them in, into or from the United States or any other
Restricted Jurisdiction. Any person (including, without limitation, any
custodian, nominee and trustee) who would, or otherwise intends to, or who may
have a contractual or legal obligation to, forward this announcement and/or
the Offer Document and/or any other related document to any jurisdiction
outside the UK should inform themselves of, and observe, any applicable legal
or regulatory requirements of their jurisdiction. 
 
Further details in relation to HRG Shareholders in overseas jurisdictions will
be contained in the Offer Document. 
 
Note to US holders of HRG Shares and HRG ADR Holders 
 
The New Sainsbury's Shares to be issued pursuant to the Offer have not been,
and will not be, registered under the US Securities Act. In the United States,
the Offer will be made and the New Sainsbury's Shares will be offered to
holders of HRG Shares and HRG ADR Holders only if an exemption from the
registration requirements of the US Securities Act is available. Neither the
SEC nor any US state securities commission has approved or disapproved of the
New Sainsbury's Shares to be issued in connection with the Offer, or
determined if this announcement is accurate or complete. Any representation to
the contrary is a criminal offence in the United States. 
 
Forward-looking statements 
 
This announcement (including information incorporated by reference in this
announcement), oral statements made regarding the Offer, and other information
published by Sainsbury's and (as relevant) HRG contain statements which are,
or may be deemed to be, "forward-looking statements". All statements, other
than statements of historical fact are, or may be deemed to be,
forward-looking statements. Forward-looking statements are prospective in
nature and are not based on historical facts, but rather on current
expectations and projections of the management of Sainsbury's and (as
relevant) HRG about future events, and are therefore subject to risks and
uncertainties which could cause actual results, performance or events to
differ materially from those expressed or implied by the forward-looking
statements. The forward-looking statements contained in this announcement
include statements relating to the expected effects of the Offer on the
Sainsbury's Group and the Combined Group, the expected timing and scope of the
Offer and other statements other than historical facts. Often, but not always,
forward-looking statements can be identified by the use of forward-looking
words such as "plan", "expect", "budget", "target", "aim", "scheduled",
"estimate", "forecast", "intend", "anticipate", "assume" or "believe", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Sainsbury's can give no assurance that
expectations reflected in the forward-looking statements will prove to be
correct. By their nature, forward-looking statements involve risks (known and
unknown) and uncertainties (and other factors that are in many cases beyond
the control of Sainsbury's and/or (as relevant) HRG) because they relate to
events and depend on circumstances that may or may not occur in the future. 
 
There are a number of factors that could affect the future operations of the
Sainsbury's Group and/or the Combined Group and that could cause actual
results and developments to differ materially from those expressed or implied
by such forward-looking statements. These factors include the satisfaction of
the Conditions, as well as additional factors, such as: domestic and global
business and economic conditions; asset prices; market related risks such as
fluctuations in interest rates and exchange rates, industry trends,
competition, changes in government and regulation, changes in the policies and
actions of governments and/or regulatory authorities (including changes
related to capital and tax), changes in political and economic stability,
disruption in business operations due to reorganisation activities, interest
rate, inflation and currency fluctuations, the timing impact and other
uncertainties of future or planned acquisitions or disposals or combinations,
the inability of the Combined Group to realise successfully any anticipated
synergy benefits when the Offer is implemented, the inability of the
Sainsbury's Group to integrate successfully the HRG Group's operations and
programmes when the Offer is implemented, the Combined Group incurring and/or
experiencing unanticipated costs and/or delays, or difficulties relating to
the Offer when the Offer is implemented. Other unknown or unpredictable
factors could affect future operations and/or cause actual results to differ
materially from those in the forward-looking statements. Such forward-looking
statements should therefore be construed in the light of such factors. 
 
Each forward-looking statement speaks only as of the date of this
announcement. Neither Sainsbury's nor any of its associates or directors,
officers or advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any forward-looking
statements in this announcement will actually occur. All forward-looking
statements contained in this announcement are expressly qualified in their
entirety by the cautionary statements contained or referred to in this
section. Readers are cautioned not to place undue reliance on these
forward-looking statements. Other than in accordance with their legal or
regulatory obligations (including under the Takeover Code, the Listing Rules
and the Disclosure and Transparency Rules of the FCA), the Sainsbury's Group
is under no obligation and undertakes no obligation, and expressly disclaims
any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. 
 
No profit forecasts or estimates 
 
Unless expressly stated otherwise, no statement in this announcement
(including any statement of estimated synergies) is intended as a profit
forecast or a profit estimate and no statement in this announcement should be
interpreted to mean that earnings per Sainsbury's Share or HRG Share for the
current or future financial years would necessarily match or exceed the
historical published earnings per Sainsbury's Share or HRG Share. 
 
Disclosure requirements of the Takeover Code 
 
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per
cent. or more of any class of relevant securities of an offeree company or of
any securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the Offer Period and, if later, following the announcement in
which any securities exchange offeror is first identified. 
 
An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 pm (London time) on the 10th
Business Day following the commencement of the Offer Period and, if
appropriate, by no later than 3.30 pm (London time) on the 10th Business Day
following the announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of the
offeree company or of a securities exchange offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure. 
 
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a Dealing
Disclosure if the person deals in any relevant securities of the offeree
company or of any securities exchange offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any securities exchange offeror(s),
save to the extent that these details have previously been disclosed under
Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be
made by no later than 3.30 pm (London time) on the Business Day following the
date of the relevant dealing. 
 
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3. 
 
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4). 
 
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website
atwww.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the Offer Period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure. 
 
Publication on website and availability of hard copies 
 
A copy of this announcement will be made available, subject to certain
restrictions relating to persons resident in or subject to laws and/or
regulations of the United States or any other Restricted Jurisdictions, on the
Sainsbury's Group's website
athttp://www.j-sainsbury.co.uk/investor-centre/disclaimer/by no later than 12
noon (London time) on the Business Day following this announcement. For the
avoidance of doubt, neither the contents of the website nor the contents of
any website accessible from hyperlinks on the website (or any other websites
referred to in this announcement) are incorporated into, or form part of this
announcement. 
 
Information relating to HRG Shareholders 
 
Please be aware that addresses, electronic addresses and certain other
information provided by HRG Shareholders, persons with information rights and
other relevant persons for the receipt of communications from HRG may be
provided to Sainsbury's during the Offer Period as required under Section 4 of
Appendix 4 of the Takeover Code. 
 
Rounding 
 
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them. 
 
Appendix 1
CONDITIONS AND FURTHER TERMS OF THE OFFER 
 
The Offer will be subject to the applicable requirements of the Takeover Code,
the Panel, the London Stock Exchange and the FCA. The Offer will be governed
by English law and will be subject to the exclusive jurisdiction of the
English courts. In addition, the Offer will be subject to the terms and
conditions set out below and to be set out in the Offer Document and the Form
of Acceptance. 
 
Each Condition shall be regarded as a separate Condition (as the case may be)
and shall not be limited by reference to any other Condition. 
 
1.         Conditions of the Offer 
 
Acceptance condition 
 
(a)        valid acceptances of the Offer being received (and not, where
permitted, withdrawn) by no later than 1.00 p.m. on the First Closing Date (or
such later time(s) and/or date(s) as Sainsbury's may, in accordance with the
Takeover Code or with the consent of the Panel, decide) in respect of not less
than 90 per cent. (or such lesser percentage as Sainsbury's may decide) of the
HRG Shares to which the Offer relates and of the voting rights attached to
those shares, provided that this Condition 1(a) will not be satisfied unless
Sainsbury's and/or any member of the Sainsbury's Group shall have acquired or
agreed to acquire (whether pursuant to the Offer or otherwise), directly or
indirectly, HRG Shares carrying in aggregate more than 50 per cent. of the
voting rights then normally exercisable at a general meeting of HRG, including
for this purpose (except to the extent otherwise agreed by the Panel) any such
voting rights attaching to HRG Shares that are unconditionally allotted or
issued before the Offer becomes or is declared unconditional as to acceptances
whether pursuant to the exercise of any outstanding subscription or conversion
rights or otherwise. 
 
For the purposes of this Condition: 
 
(i)         HRG Shares which have been unconditionally allotted shall be
deemed to carry the voting rights they will carry upon being entered into the
register of members of HRG; 
 
(ii)        all percentages of voting rights, share capital and relevant
securities are to be calculated by reference to the percentage held and in
issue outside treasury; and 
 
(iii)       the expression "HRG Shares to which the Offer relates" shall be
construed in accordance with Chapter 3 of Part 28 of the 2006 Act; 
 
Admission of New Sainsbury's Shares 
 
(b)        (i) the FCA having acknowledged to Sainsbury's or its agent (and
such acknowledgement not having been withdrawn) that the application for the
admission of the New Sainsbury's Shares to the Official List with a premium
listing has been approved and (after satisfaction of any conditions to which
such approval is expressed to be subject ("listing conditions")) admission
will become effective as soon as a dealing notice has been issued by the FCA
and any listing conditions having been satisfied; and (ii) the London Stock
Exchange having acknowledged to Sainsbury's or its agent (and such
acknowledgement not having been withdrawn) that the New Sainsbury's Shares
will be admitted to trading; 
 
Regulatory conditions 
 
(c)        the FCA giving notice in writing pursuant to section 189(4)(a) of
FSMA, in terms reasonably satisfactory to Sainsbury's, of its approval (or
being treated as having given such approval under section 189(6) of FSMA) in
respect of each person (whether or not a member of the Wider Sainsbury's
Group) who will acquire control or (if applicable) increase control over (as
defined in sections 181 and 182 of FSMA) any member of the Wider HRG Control
Group which is (or shall be as at the time the Offer becomes or is declared
unconditional in all respects) a UK authorised person (as defined in section
191G(1) of FSMA), and which in either case would result from or in connection
with or is contemplated by the implementation of the Offer and the FCA not
having cancelled or varied, and not having notified (or intimated that it may
notify) any proposal to cancel or vary, any permission (within the meaning of
FSMA) held by any such authorised person at the date of this announcement; 
 
(d)        the GFSC either giving notice in writing pursuant to The Insurance
Business (Bailiwick of Guernsey) Law, 2002 (the "Insurance Law"), in terms
reasonably satisfactory to Sainsbury's, of no objection or being deemed to
have given such no objection pursuant to the Insurance Law, as a result of or
in connection with or is contemplated by the implementation of the Offer in
respect of any member of the Wider HRG Control Group which is (or shall be as
at the time the Offer becomes or is declared unconditional in all respects) a
GFSC licensed entity, and the GFSC not having cancelled, varied or imposed
conditions on, and not having notified (or intimated that it may notify) any
proposal to cancel, vary or impose conditions on, the terms of any licence
held by any such GFSC licensed entity at the date of this announcement; 
 
Merger control 
 
(e)        the CMA deciding not to make a Phase 2 CMA Reference in respect of
the Acquisition; 
 
Other Third Party clearances 
 
(f)         other than in respect of Conditions 1(c) to 1(e), no central bank,
government or governmental, quasi-governmental, supranational, statutory,
regulatory, environmental, administrative, fiscal or investigative body,
court, trade agency, association, institution, environmental body, employee
representative body or any other body or person whatsoever in any jurisdiction
(each a "Third Party") having given notice of a decision to take, institute,
implement or threaten any action, proceeding, suit, investigation, enquiry or
reference, or having required any action to be taken or otherwise having done
anything or having enacted, made or proposed any statute, regulation,
decision, order or change to published practice and there not continuing to be
outstanding any statute, regulation, decision or order which would or might
reasonably be expected to: 
 
(i)         make the Offer, its implementation or the acquisition or proposed
acquisition of any shares or other securities in, or control or management of,
any member of the Wider HRG Group by any member of the Wider Sainsbury's Group
void, illegal and/or unenforceable under the laws of any relevant
jurisdiction, or otherwise directly or indirectly prevent, prohibit, or
materially restrain, restrict, impede, challenge, delay or otherwise interfere
with the implementation of, or impose additional material conditions or
obligations with respect to, the Offer or the acquisition of any shares or
other securities in, or control or management of, any member of the Wider HRG
Group by any member of the Wider Sainsbury's Group or require amendment of the
Offer; 
 
(ii)        require, prevent or delay the divestiture or alter the terms
envisaged for such divestiture by any member of the Wider Sainsbury's Group or
by any member of the Wider HRG Group of all or any part of their businesses,
assets or property or impose any limitation on the ability of all or any of
them to conduct their businesses (or any part thereof) or to own, control or
manage any of their assets or properties (or any part thereof) in each case to
an extent which is material in the context of the Wider HRG Group taken as a
whole or the Wider Sainsbury's Group taken as a whole or in the context of the
Offer (as the case may be); 
 
(iii)       impose any material limitation on, or result in a material delay
in, the ability of any member of the Wider Sainsbury's Group directly or
indirectly to acquire or hold or to exercise effectively all or any rights of
ownership in respect of shares or other securities in HRG (or any member of
the Wider HRG Group) or on the ability of any member of the Wider HRG Group or
any member of the Wider Sainsbury's Group directly or indirectly to hold or
exercise effectively any rights of ownership in respect of shares or other
securities (or the equivalent) in, or to exercise management control over, any
member of the Wider HRG Group in each case to an extent which is material in
the context of the Wider HRG Group taken as a whole or the Wider Sainsbury's
Group taken as a whole or in the context of the Offer (as the case may be); 
 
(iv)       other than pursuant to the implementation of the Offer, require any
member of the Wider Sainsbury's Group or the Wider HRG Group to acquire or
offer to acquire any shares, other securities (or the equivalent) or interest
in any member of the Wider HRG Group or any asset owned by any third party
which is material in the context of the Wider HRG Group or the Wider
Sainsbury's Group, in either case taken as a whole or in the context of the
Offer; 
 
(v)        require, prevent or delay a divestiture by any member of the Wider
Sainsbury's Group of any shares or other securities (or the equivalent) in any
member of the Wider HRG Group to an extent which is material in the context of
the Wider HRG Group or the Wider Sainsbury's Group, in either case taken as a
whole or in the context of the Offer; 
 
(vi)       result in any member of the Wider HRG Group ceasing to be able to
carry on business under any name under which it presently carries on business
to an extent which is material in the context of the Wider HRG Group taken as
a whole or in the context of the Offer; 
 
(vii)      impose any limitation on the ability of any member of the Wider
Sainsbury's Group or any member of the Wider HRG Group to conduct, integrate
or co-ordinate all or any part of their respective businesses with all or any
part of the business of any other member of the Wider Sainsbury's Group and/or
the Wider HRG Group in each case in a manner which is materially adverse to
the Wider Sainsbury's Group taken as a whole and/or the Wider HRG Group, taken
as a whole or in the context of the Offer; or 
 
(viii)      except as Fairly Disclosed, otherwise affect the business, assets,
value, profits, prospects or operational performance of any member of the
Wider HRG Group or any member of the Wider Sainsbury's Group in each case in a
manner which is adverse to and material in the context of the Wider HRG Group
taken as a whole or of the obligations of any member of the Wider Sainsbury's
Group in connection with the financing of the Offer or in the context of the
Offer; 
 
and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could decide to take, institute,
implement or threaten any such action, proceeding, suit, investigation,
enquiry or reference or take any other step under the laws of any jurisdiction
in respect of the Offer or proposed acquisition of any HRG Shares or otherwise
intervene having expired, lapsed, or been terminated; 
 
(g)        no material undertakings or assurances being sought from any member
of the Wider Sainsbury's Group or any member of the Wider HRG Group by the
Secretary of State or any other Third Party, except on terms reasonably
satisfactory to Sainsbury's; 
 
(h)        other than in respect of Conditions 1(c) to 1(e), all material
notifications, filings or applications which are necessary or appropriate
having been made in connection with the Offer and all necessary waiting and
other time periods (including any extensions thereof) under any applicable
legislation or regulation of any jurisdiction having expired, lapsed or been
terminated (as appropriate) and all statutory and regulatory obligations in
any jurisdiction having been complied with and all Authorisations which are
necessary or appropriate in any jurisdiction for or in respect of the Offer or
the proposed acquisition of any shares or other securities in, or control of,
HRG by any member of the Wider Sainsbury's Group having been obtained in terms
and in a form reasonably satisfactory to Sainsbury's from all appropriate
Third Parties or (without prejudice to the generality of the foregoing) from
any person or bodies with whom any member of the Wider HRG Group or the Wider
Sainsbury's Group has entered into contractual arrangements and all such
Authorisations which are necessary or appropriate to carry on the business of
any member of the Wider HRG Group in any jurisdiction having been obtained in
each case where the direct consequence of a failure to make such notification
or filing or to wait for the expiry, lapse or termination of any such waiting
or other time period or to comply with such obligation or obtain such
Authorisation would be unlawful in any relevant jurisdiction or have a
material adverse effect on the Wider HRG Group or the Wider Sainsbury's Group
in each case taken as a whole or the ability of Sainsbury's to implement the
Offer and all such Authorisations remaining in full force and effect at the
time at which the Offer becomes otherwise unconditional in all respects and
there being no notice or intimation of an intention to revoke, suspend,
restrict, modify or not to renew such Authorisations; 
 
(i)         no temporary restraining order, preliminary or permanent
injunction, preliminary or permanent enjoinment, or other order threatened or
issued and being in effect by a court or other Third Party which has the
effect of making the Offer or any acquisition or proposed acquisition of any
shares or other securities or control or management of, any member of the
Wider HRG Group by any member of the Wider Sainsbury's Group, or the
implementation of either of them, void, voidable, illegal and/or unenforceable
under the laws of any relevant jurisdiction, or otherwise directly or
indirectly prohibiting, preventing, restraining, restricting, delaying or
otherwise interfering with the consummation or the approval of the Offer or
any matter arising from the proposed acquisition of any shares or other
securities in, or control or management of, any member of the Wider HRG Group
by any member of the Wider Sainsbury's Group, in each case in a manner which
is adverse to and material in the context of the Offer; 
 
Confirmation of absence of adverse circumstances 
 
(j)         except as Fairly Disclosed, there being no provision of any
arrangement, agreement, licence, permit, franchise, lease or other instrument
to which any member of the Wider HRG Group is a party or by or to which any
such member or any of its assets is or may be bound, entitled or be subject or
any event or circumstance which, as a consequence of the Offer or the proposed
acquisition by any member of the Wider Sainsbury's Group of any shares or
other securities in HRG or because of a change in the control or management of
any member of the Wider HRG Group or otherwise, would or might reasonably be
expected to result in, in each case to an extent which is material in the
context of the Wider HRG Group taken as a whole or in the context of the Offer
or to the obligations of any member of the Wider Sainsbury's Group in
connection with the financing of the Offer: 
 
(i)         any monies borrowed by, or any other indebtedness, actual or
contingent of, or any grant available to, any member of the Wider HRG Group
being or becoming repayable, or capable of being declared repayable,
immediately or prior to its or their stated maturity date or repayment date,
or the ability of any such member to borrow monies or incur any indebtedness
being withdrawn or inhibited or being capable of becoming or being withdrawn
or inhibited; 
 
(ii)        the rights, liabilities, obligations, interests or business of any
member of the Wider HRG Group or any member of the Wider Sainsbury's Group
under any such arrangement, agreement, licence, permit, lease or instrument or
the interests or business of any member of the Wider HRG Group or any member
of the Wider Sainsbury's Group in or with any other firm or company or body or
person (or any agreement or arrangement relating to any such business or
interests) being or likely to become terminated or adversely modified or
affected or any onerous obligation or liability arising or any adverse action
being taken or arising thereunder; 
 
(iii)       any member of the Wider HRG Group ceasing to be able to carry on
business under any name under which it presently carries on business; 
 
(iv)       any assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider HRG Group being or falling to be disposed
of or charged or any right arising under which any such asset or interest
could be required to be disposed of or charged or could cease to be available
to any member of the Wider HRG Group otherwise than in the ordinary course of
business; 
 
(v)        the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business, property or
assets of any member of the Wider HRG Group or any such mortgage, charge or
other security interest (whenever created, arising or having arisen), becoming
enforceable; 
 
(vi)       the business, assets, value, financial or trading position,
profits, prospects or operational performance of any member of the Wider HRG
Group being prejudiced or adversely affected; 
 
(vii)      the creation or acceleration of any liability (actual or
contingent) by any member of the Wider HRG Group; or 
 
(viii)      any liability of any member of the Wider HRG Group to make any
severance, termination, bonus or other payment to any of its directors or
other officers; 
 
No material transactions, claims or changes in the conduct of the business of
the HRG Group 
 
(k)        since 28 February 2015 and except as Fairly Disclosed, no member of
the Wider HRG Group having: 
 
(i)         save as between HRG and its wholly-owned subsidiaries or between
such wholly-owned subsidiaries and save for the issue or transfer out of
treasury of HRG Shares on the exercise of options or vesting of awards granted
before the date of this announcement in the ordinary course, issued or agreed
to issue or authorised or proposed or announced its intention to authorise or
propose the issue of additional shares of any class, or securities or
securities convertible into, or exchangeable for, or 

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