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

J SainsburyAnnouncement

01/04/2016 07:06

- Part 2: For the preceding part double click  ID:nRSA8096Ta 

transforming from a catalogue-led business
to a digitally led business. The Transformation Plan addresses competitive
challenges, aims to exploit emerging market opportunities and restore
sustainable growth. The Homebase Sale, which completed on 27 February 2016,
further enables the remaining group to focus on the Transformation Plan. 
 
As stated in Home Retail Group plc's circular dated 2 February 2016 relating
to the Homebase Sale, meaningful progress has been made to date on the
Transformation Plan, and the Home Retail Group Directors continue to believe
that execution of the plan would create a leading digital retailer in the UK
and deliver future shareholder value. 
 
For Home Retail Group plc, there will be significant business benefits in the
combination with Sainsbury's, including benefits of scale and opportunity to
accelerate the work begun under the Transformation Plan, creating
opportunities for our employees and other stakeholders. While the Home Retail
Group Directors are confident of the future growth prospects of Home Retail
Group plc, they believe that the Acquisition provides Home Retail Group
Shareholders with a value today which is attractive and reflects the prospects
for Home Retail Group plc under the Transformation Plan. In addition, the
share component of the Acquisition will enable Home Retail Group Shareholders
to benefit from the value creation expected to arise through the combination,
including significant synergies. 
 
The Home Retail Group Directors considered the Acquisition in relation to the
value and prospects of the underlying business, and the potential medium-term
standalone value of Home Retail Group Shares in reaching its conclusion.
Accordingly, the Home Retail Group Directors intend unanimously to recommend
that Home Retail Group Shareholders vote in favour of the Scheme at the Court
Meeting and the resolutions relating to the Scheme and the Acquisition to be
proposed at the Home Retail Group General Meeting. 
 
7.         Mix and Match Facility 
 
Home Retail Group Shareholders (other than certain persons in Restricted
Jurisdictions) may elect, subject to availability, to vary the proportions in
which they receive New Sainsbury's Shares and cash in respect of their
holdings in Home Retail Group Shares. However, the total number of New
Sainsbury's Shares to be issued and the maximum aggregate amount of cash to be
paid under the Acquisition will not be varied as a result of elections under
the Mix and Match Facility. Accordingly, satisfaction of elections made by
Home Retail Group Shareholders under the Mix and Match Facility will depend on
the extent to which other Home Retail Group Shareholders make offsetting
elections. 
 
To the extent that elections cannot be satisfied in full, they will be scaled
down on a pro-rata basis. As a result, Home Retail Group Shareholders who make
an election under the Mix and Match Facility will not necessarily know the
exact number of New Sainsbury's Shares or the amount of cash they will receive
until settlement of the consideration due to them in respect of the
Acquisition. The Mix and Match Facility is conditional upon Completion. 
 
Elections under the Mix and Match Facility will not affect the entitlements of
those Home Retail Group Shareholders who do not make such elections. 
 
Further details in relation to the Mix and Match Facility will be contained in
the Scheme Document and accompanying Form of Election. 
 
8.         Financing of the Acquisition 
 
Sainsbury's intends to finance the cash consideration payable to Home Retail
Group Shareholders pursuant to the Acquisition through its existing debt
facilities and resources, to be entirely refinanced at a later date through
the proposed transfer of the Home Retail Group's Financial Services business
to Sainsbury's Bank.  This would have the consequence of lowering the Combined
Group's lease adjusted leverage (excluding Sainsbury's Bank) relative to the
standalone lease adjusted leverage of the Sainsbury's Group (excluding
Sainsbury's Bank). 
 
Sainsbury's entered into an amendment and restatement agreement dated 18 March
2016 (the "Amendment and Restatement Agreement") making certain amendments to
the existing facility agreement dated 5 May 2015 between Sainsbury's,
Sainsbury's Supermarkets Limited as guarantor, HSBC Bank plc as facility
agent, HSBC Corporate Trustee Company (UK) Limited as security agent and the
financial institutions listed therein to (i) permit the Acquisition and (ii)
allow Sainsbury's to use a proportion of the facilities to finance the cash
consideration payable under the Acquisition. 
 
Morgan Stanley and UBS are satisfied that sufficient resources are available
to Sainsbury's to satisfy in full the cash consideration payable to Home
Retail Group Shareholders pursuant to the terms of the Acquisition. 
 
Further information on the financing of the Acquisition will be set out in the
Scheme Document. 
 
9.         Information relating to the Sainsbury's Group 
 
Founded in 1869, as at 12 March 2016 the Sainsbury's Group operated 1,374
stores - including 601 supermarkets and 773 convenience stores, and employed
approximately 165,156 colleagues across the UK. With around 25 million
customer transactions every week, the Sainsbury's Group's focus is on
providing great quality products at fair prices. The Sainsbury's Group sells
food, clothing and general merchandise products to customers across
supermarkets, convenience stores and online and also sells fuel from petrol
filling stations adjacent to some of its stores. Sainsbury's Bank offers
accessible financial products such as credit cards, insurance and personal
loans that reward customers who both bank and shop with the Sainsbury's Group.
Strong, well-established values are integral to the Sainsbury's Group's
success in helping customers Live Well for Less. 
 
J Sainsbury plc is the holding company of the Sainsbury's Group. Sainsbury's
was listed on the London Stock Exchange in 1973. As at the Last Practicable
Date, Sainsbury's had a market capitalisation of £5,317 million. 
 
For the 52-week period ended 14 March 2015, the Sainsbury's Group generated
revenue of £23,775 million excluding VAT, including fuel, and delivered
underlying profit before tax of £681 million. As at 14 March 2015, the
Sainsbury's Group had total assets of £16,537 million. 
 
10.       Information relating to the Home Retail Group 
 
The Home Retail Group consists of one of the most recognised retailing brands
in the UK home and general merchandise sector, Argos, supported by its
Financial Services business. 
 
The Home Retail Group offers over 57,000 products (5) through Argos and
operates a nationwide distribution network across multiple distribution
centres and 845 stores (6). The Home Retail Group offers immediacy and
convenience through a multi-channel offer.  Customers can place orders
in-store, online, on the phone and through smartphone and tablet apps, with
collection either immediately in-store, during a specified delivery slot
either that day or a day of their choosing through FastTrack Delivery or at
specified delivery times for larger items such as appliances and furniture. 
 
In October 2012, Argos outlined a five-year Transformation Plan to reinvent
itself as a digital retail leader, transforming from a catalogue-led business
to a digital-led business. According to Home Retail Group plc the
Transformation Plan addresses competitive challenges, and aims to exploit
emerging market opportunities and restore sustainable growth. 
 
Home Retail Group plc is the holding company of Argos and was listed on the
London Stock Exchange in 2006. On 27 February 2016, Home Retail Group plc
completed the Homebase Sale.  As at the Last Practicable Date, Home Retail
Group plc had a market capitalisation of £1,349 million. 
 
For the 52-week period ended 28 February 2015, the Home Retail Group
(excluding Homebase, but without adjustments for centrally held functions
which were sold as part of the Homebase Sale) generated revenue of £4,231.1
million and delivered benchmark operating profit of £109.7 million. As at 29
August 2015, on an unaudited pro forma basis, the Home Retail Group (excluding
Homebase) had total assets of £3,514.4 million(7). 
 
Notes: 
 
(5)           Based on Home Retail Group plc's Investor Pack - October 2015. 
 
(6)           Based on Home Retail Group plc's trading statement for the final
eight-week trading period for the financial year ended 27 February 2016,
published on 10 March 2016. 
 
(7)           Based on the pro forma statement of net assets in Home Retail
Group plc's circular dated 2 February 2016. 
 
11.       Current Trading 
 
(a)        Sainsbury's 
 
Q4 financial highlights 
 
On 15 March 2016, Sainsbury's published a trading statement in respect of the
final nine-week trading period for the financial year ended 12 March 2016, in
which it highlighted the following: 
 
"Positive like-for-like Retail sales growth (excl. fuel) for the first quarter
in over two years; total Retail sales for fourth quarter up 1.2 per cent
(excl. fuel), up 0.5 per cent (inc. fuel); like-for-like Retail sales for
fourth quarter up 0.1 per cent (excl. fuel), down 0.4 per cent (inc. fuel);
supermarkets delivering like-for-like transaction and volume growth; and a
commitment to phase out vast majority of multi-buy promotions across grocery
products." 
 
"We have delivered a strong performance this quarter. Our supermarkets
recorded both like-for-like transaction and volume growth and we continue to
exceed our internal metrics for service and availability. We also maintained
our market share in the quarter. The market will remain competitive as food
deflation continues to impact sales growth. 
 
We are progressing well with our quality investment in 3,000 own-brand
products. The New Year is traditionally a time when customers focus on healthy
eating and to cater for this demand we launched a number of vegetable-based
product innovations including boodles (butternut squash noodles) and courgetti
(spiralized courgette) which are proving extremely popular with our customers.
We also introduced new lines to our healthier bread range 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 Group 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 Group Profit Estimate"). The Sainsbury's Directors have
considered the Sainsbury's Group 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 Group Profit
Estimate is set out in full in Part A of Appendix 5 to this announcement,
together with the basis of preparation and confirmations by the Sainsbury's
Directors. 
 
(b)        Home Retail Group plc 
 
Q4 financial highlights 
 
On 10 March 2016, Home Retail Group plc published a trading statement in
respect of the final eight-week trading period for the financial year ended 27
February 2016 (the "Home Retail Group Q4 Trading Statement"), an extract of
which is set out below: 
 
"Total sales at Argos increased by 1.9% to £515m. Net new space contributed
3.0%, principally as a result of the 94 digital concessions and collection
points opened within the past year. The store estate has increased by a net 90
stores to 845 in the year. Like-for-like sales declined by 1.1% in the period,
however the cannibalisation impact on like-for-like sales as a result of the
additional new space was around 1% and therefore underlying like-for-like
sales were broadly flat in the period. 
 
Sales of non-electrical product categories grew during the period, principally
attributable to the performance of furniture and general sports, partially
offset by a decline in jewellery. However, sales of electrical products
declined during the period, principally driven by video gaming, tablets and
white goods, while mobiles continued to deliver good levels of growth. 
 
Internet sales grew by 13% in the period and represented 51% of total Argos
sales, up from 46% for the same period last year. Within this, mobile commerce
sales grew by 15% to represent 28% of total Argos sales, up from 25% in the
prior year. 
 
Argos' gross margin was up approximately 75 basis points." 
 
Home Retail Group Profit Estimate 
 
In the Home Retail Group Q4 Trading Statement, Home Retail Group plc stated
that it expects that Home Retail Group Benchmark Profit before Tax for the
financial year ended 27 February 2016 will be in line with the current
consensus of market expectations of £93 million (the "Home Retail Group Profit
Estimate"). The Home Retail Group Directors have considered the Home Retail
Group 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. 
 
The Panel Executive has granted a dispensation from the requirement for Home
Retail Group plc to publish reports as required by Rules 28.1(a)(i) and (ii),
pursuant to Note 2(b) on Rule 28.1 of the Takeover Code.  As required by Note
2(b) on Rule 28.1 of the Code, the Home Retail Group Profit Estimate is set
out in full in Part B of Appendix 5 to this announcement, together with the
basis of preparation and confirmations by the Home Retail Group Directors. 
 
12.       Management, employees and locations 
 
Both the Sainsbury's Group and the Home Retail Group 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. 
 
The Home Retail Group'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 the
Home Retail Group and the Sainsbury's Group, with a view to retaining the Home
Retail Group's expertise in digital, channels, product markets and financial
services. The leadership team will be determined in due course and in
consultation with the Home Retail Group's senior leadership. 
 
In order to achieve some of the expected benefits of the combination of the
Sainsbury's Group and the Home Retail 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 the Home Retail
Group and the Sainsbury's Group. 
 
Sainsbury's confirms that the existing contractual and statutory employment
rights, including pension rights, of all employees of the Sainsbury's Group
and the Home Retail Group will be fully observed following Completion. Further
information in respect of employees and pensions will be set out in the Scheme
Document. 
 
It is expected that the non-executive directors of Home Retail Group plc will
resign from office following Completion and their appointment as Home Retail
Group Directors will end in accordance with the terms of their appointment
letters. 
 
No proposals have yet been made on the terms of any incentivisation
arrangements for relevant employees or managers. 
 
13.       Pension arrangements 
 
Sainsbury's and the trustee of the Home Retail Group Pension Scheme (the "Home
Retail Group 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 Home Retail Group plc with the
Home Retail Group 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 Home Retail Group plc (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 Home Retail Group Trustee (resulting in £75 million in
total, inclusive of the £37.5 million of security agreed with Home Retail
Group plc 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 Home Retail Group Trustee has confirmed to Sainsbury's in writing that,
having taken advice, it is satisfied that it does not consider the
Acquisition, on the terms described herein, to be materially detrimental to
the financial support in place for the Home Retail Group Pension Scheme. 
 
14.       Offer-related arrangements 
 
(a)         Confidentiality Agreement 
 
Sainsbury's and Home Retail Group plc have entered into a confidentiality
agreement dated 3 February 2016 pursuant to which each of Sainsbury's and Home
Retail Group plc 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 Acquisition, the pension trustees of Sainsbury's and Home Retail Group
plc, or if required by applicable laws or regulations. 
 
The confidentiality obligations of each party under the Confidentiality
Agreement will terminate on Completion or, in the event that the Acquisition
is not Completed, the date that is six months after the Acquisition terminates
(or, if Sainsbury's exercises the right to implement the Acquisition by way of
a Takeover Offer, the Takeover Offer lapses or is withdrawn). 
 
(b)        Co-operation Agreement 
 
Sainsbury's and Home Retail Group plc have entered into a co-operation
agreement dated 1 April 2016 with respect to the implementation of the
Acquisition. 
 
Sainsbury's and Home Retail Group plc have agreed to co-operate and provide
each other with reasonable information, assistance and access in relation to
the filings, submissions and notifications to be made for the process of
obtaining all regulatory clearances. Sainsbury's and Home Retail Group plc
have also agreed to provide each other with reasonable information, assistance
and access for the preparation of the key shareholder documentation. 
 
The Co-operation Agreement records Sainsbury's and Home Retail Group plc's
intention to implement the Acquisition pursuant to the Scheme. However,
Sainsbury's may implement the Acquisition by way of a Takeover Offer if: (i)
Home Retail Group plc's consents; (ii) a third party announces a possible
offer or firm intention to make an offer for Home Retail Group plc; or (iii)
the Board of Home Retail Group plc withdraws or modifies its unanimous
recommendation of (or intention to recommend) the Acquisition. 
 
Sainsbury's is subject to certain customary restrictions on the conduct of its
business during the period pending Completion, and which prohibit, among other
things: (i) the payment by Sainsbury's of dividends (other than in the
ordinary course and consistent with past practice and its dividend policy) and
(ii) the allotment of further shares (or rights or options in respect of
shares) (other than pursuant to employee share incentive plans, or in order to
satisfy options or awards vesting under those plans). 
 
The Co-operation Agreement also contains provisions that will apply in respect
of Home Retail Group Employee Share Plans and certain other arrangements for
the benefit of employees (see paragraph 15 below). 
 
The Co-operation Agreement will terminate if (amongst other circumstances): 
 
(i)      agreed in writing by Sainsbury's and Home Retail Group plc; 
 
(ii)      the Acquisition has not Completed prior to the Long Stop Date; or 
 
(iii)     upon service of written notice by Sainsbury's to Home Retail Group
plc, if: (a) the Scheme Document does not include a unanimous and
unconditional recommendation of the Acquisition, or the Home Retail Group
Directors otherwise withdraw or modify their recommendation; (b) a third party
announces a firm intention to make an offer for Home Retail Group plc which is
recommended by the Home Retail Group Directors, or which completes; (c) either
the Court Meeting or Home Retail Group General Meeting is not held by the 22nd
day after the expected date of such meetings as set out in the Scheme Document
(or such later date as may be agreed between Sainsbury's and Home Retail Group
plc); (d) the Scheme is not approved by the Home Retail Group Shareholders at
the Court Meeting or the Home Retail Group General Meeting; (e) the Court
hearing to confirm the New TopCo Capital Reduction is not held within three
Business Days of the Court hearing to sanction the Scheme (or such later date
as may be agreed between Sainsbury's and Home Retail Group plc); or (f) any
Condition (which has not been waived) is invoked (with permission of the
Panel) so as to cause the Acquisition not to proceed. 
 
15.       Home Retail Group Employee Share Plans and remuneration 
 
Sainsbury's will make appropriate proposals to participants in the Home Retail
Group Employee Share Plans in due course. Participants in the Home Retail
Group Employee Share Plans will be contacted separately regarding the effect
of the Acquisition on their rights under the Home Retail Group Employee Share
Plans and with the details of Sainsbury's appropriate proposals. In summary,
awards will vest and options, which are not already exercisable, will become
exercisable at the time of the Scheme Court Order and participants will have
the opportunity to take part in the Scheme on the same basis as other Home
Retail Group Shareholders. Holders of tax-qualifying options will be given the
opportunity to exchange their options over Home Retail Group Shares for
equivalent options over Sainsbury's Shares as an alternative to exercising
their options at or up to six months after the time of the Scheme Court Order.
Further details of the terms of such proposals will be included in the Scheme
Document. 
 
The Acquisition will extend to any Home Retail Group Shares which are
unconditionally allotted, issued or transferred, on or prior to the Scheme
Record Time to satisfy the exercise of existing options or vesting of awards
under the Home Retail Group Employee Share Plans prior to the Scheme Record
Time. Any Home Retail Group Shares allotted, issued or transferred after the
Scheme Effective Date under the Home Retail Group Employee Share Plans will,
subject to the Scheme becoming Effective, be transferred to Sainsbury's (or
its nominee) in exchange for the same consideration as Home Retail Group
Shareholders will be entitled to receive under the terms of the Acquisition. 
 
The participants in the Home Retail Group Share Incentive Plan will be treated
in the same way as the other Home Retail Group Shareholders. 
 
Home Retail Group employees will be eligible to be considered for
participation in Sainsbury's employee share plans from Completion. 
 
Home Retail Group Employee Share Plans and other remuneration arrangements
will operate in the ordinary course up to Completion. Further, the Home Retail
Group will operate a part year discretionary bonus plan for the Home Retail
Group employees for the part of the financial year of Home Retail Group plc up
to Completion. 
 
16.       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. 
 
The Boards of Sainsbury's and Home Retail Group plc have agreed that, if the
Acquisition has not Completed by the Sainsbury's Interim Dividend Record Time
(and provided that Home Retail Group plc has not paid, declared, approved or
made any dividend or distribution since the date of the Original
Announcement), Home Retail Group Shareholders will be entitled to receive an
interim dividend from Home Retail Group plc for the 26 weeks ending 27 August
2016 in an aggregate amount of not more than one pence per Home Retail Group
Share (the "Permitted Home Retail Group plc Interim Dividend"), equivalent to
the Home Retail Group plc interim dividend in respect of its financial year
ended 27 February 2016. 
 
17.       Disclosure of interests in Home Retail Group 
 
Sainsbury's made a public Opening Position Disclosure in respect of the
interests in the relevant securities of Home Retail Group plc 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 Home Retail Group Shares. 
 
Save as disclosed in this announcement and in the Sainsbury's Opening Position
Disclosure, as at 30 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 Home Retail Group plc; 
 
(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 Home Retail
Group plc; or 
 
(c)        borrowed or lent, or entered into any financial collateral
arrangements or dealing arrangements in respect of, any relevant securities of
Home Retail Group plc. 
 
18.       Structure of the Scheme, the Proposed Capital Returns and the
Acquisition 
 
It is intended that the Scheme, the Proposed Capital Returns and the
Acquisition will be implemented by way of a three step process summarised
below, pursuant to which Sainsbury's will acquire (indirectly, following the
introduction of a new holding company of Home Retail Group plc (the "New
TopCo") and the subsequent reduction of capital of New TopCo (the "New TopCo
Capital Reduction")) the entire issued and to be issued share capital of Home
Retail Group plc. 
 
·     Step 1: Introduction of New TopCo 
 
Under the terms of the Scheme, the Scheme Shares will be cancelled in
consideration for which the Scheme Shareholders will receive newly issued
shares in New TopCo ("New TopCo Shares") and New TopCo will thereby become the
sole shareholder of Home Retail Group plc. 
 
To become Effective, the Scheme requires, among other things, the approval of
a majority in number of the relevant Home Retail Group Shareholders present
and voting in person or by proxy at the Court Meeting, representing not less
than 75 per cent. in value of the Scheme Shares voted by such Home Retail
Group Shareholders and the passing of the resolutions necessary to implement
the Scheme and the Acquisition at the Home Retail Group General Meeting. The
Scheme must also be sanctioned by the Court. 
 
Once the necessary approvals from Home Retail Group Shareholders have been
obtained and the other Conditions (other than Condition 1(a) in relation to
the Long Stop Date,  Condition 1(c) in relation to the New TopCo Capital
Reduction and, if Condition 1(d) in relation to Admission of New Sainsbury's
Shares has not yet been satisfied, Condition 1(d)) have been satisfied or
(where applicable) waived and the Scheme has been sanctioned by the Court, the
Scheme will become Effective upon delivery of the Scheme Court Order to the
Registrar of Companies. 
 
Upon the Scheme becoming Effective, it will be binding on all Home Retail
Group Shareholders, irrespective of whether or not they attended or voted at
the Home Retail Group Meetings. 
 
The Scheme will be governed by English law. The Scheme will be subject to the
applicable requirements of the Takeover Code, the Panel, the London Stock
Exchange and the FCA. 
 
·      Step 2: New TopCo Capital Reduction 
 
Following the Scheme becoming Effective, New TopCo's share capital will be
reduced through a Court procedure (the "New TopCo Capital Reduction")
following which the Proposed Capital Returns will be paid to New TopCo
Shareholders (i.e. former Home Retail Group Shareholders). 
 
To become Effective, the New TopCo Capital Reduction must be confirmed by the
Court. 
 
·     Step 3: transfer of New TopCo Shares to Sainsbury's 
 
Immediately following the New TopCo Capital Reduction becoming Effective, all
of the New TopCo Shares will be transferred to Sainsbury's pursuant to the
mandatory transfer provisions in the articles of association of New TopCo, in
consideration for the Offer Consideration. 
 
Further details on the steps and structure of the Scheme and the New TopCo
Capital Reduction will be set out in the Scheme Document. The Panel has
consented to Home Retail Group plc posting the Scheme Document more than 28
days after this announcement. 
 
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 agreement of Home Retail Group plc and, if required, the
Panel). 
 
Subject to the satisfaction or waiver of the Conditions, the Acquisition is
expected to Complete in the third quarter of 2016. 
 
19.       Conditions 
 
The Acquisition 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 Scheme Document. The Conditions
include, amongst other things: (i) approval by a majority in number of Home
Retail Group Shareholders who are on the register of members of Home Retail
Group plc at the Voting Record Time, present and voting, whether in person or
by proxy, at the Court Meeting and at any separate class meeting which may be
required (or any adjournment thereof), and who represent not less than 75 per
cent. in value of the Home Retail Group Shares voted by such Home Retail Group
Shareholders; (ii) the passing of all resolutions required to approve and
implement the Scheme and the Acquisition and to approve certain related
matters by the requisite majority of Home Retail Group Shareholders at the
Home Retail Group General Meeting (or any adjournment thereof); (iii)
regulatory clearances being received from the FCA, the GFSC and the CMA; and
(iv) the Scheme and the New TopCo Capital Reduction becoming Effective and all
other Conditions being fulfilled or (if capable of waiver) waived by no later
than the Long Stop Date. If the Conditions have not been satisfied or waived
by the Long Stop Date, or such later date as Sainsbury's and Home Retail Group
plc may agree and (if required) the Panel and the Court allow, the Acquisition
will not proceed. 
 
20.       Delisting and cancellation of trading 
 
It is intended that dealings in Home Retail Group Shares will be suspended at
5.00 p.m. London time on the date of the Court hearing to sanction the Scheme.
It is further intended that an application will be made to the London Stock
Exchange for the cancellation of the trading of Home Retail Group Shares on
its main market for listed securities and the UKLA will be requested to cancel
the listing of Home Retail Group Shares on the premium segment of the Official
List to take effect on or shortly after the Scheme Effective Date. 
 
Share certificates in respect of the Home Retail Group Shares will cease to be
valid and should be destroyed following the Scheme Effective Date. In addition
entitlements to Home Retail Group Shares held within the CREST system will be
cancelled. 
 
As soon as reasonably practicable after the Completion Date, it is intended
that Home Retail Group plc will be re-registered as a private limited company
under the relevant provisions of the 2006 Act. 
 
21.       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 Home Retail Group and the New
Sainsbury's Shares. The Prospectus will be published at or around the same
time as the Scheme Document is posted to Home Retail Group Shareholders. 
 
22.       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 Completion Date. 
 
23.       Fractional entitlements 
 
Fractions of New Sainsbury's Shares will not be allotted or issued to Home
Retail Group 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 Completion Date. 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 Home Retail Group 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. 
 
24.       Dealing facility 
 
Subject to any legal or regulatory requirements or restrictions in any
Restricted Jurisdictions, Sainsbury's has agreed to arrange a dealing facility
for Home Retail Group plc's retail shareholders. Under such dealing facility,
the New Sainsbury's Shares to which Home Retail Group plc's retail
shareholders become entitled may be sold for their benefit at the standard
cost charged by the provider of such facility. Further details of the dealing
facility will be included in the Scheme Document. 
 
25.       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/ and on the Home
Retail Group's website at
https://www.homeretailgroup.com/investor-centre/sainsburys-offer/ by no later
than noon (London time) on the Business Day following this announcement: 
 
(a)        this announcement; 
 
(b)        the Co-operation Agreement; and 
 
(c)        the irrevocable undertakings listed in Appendix 3. 
 
In addition, copies of the following documents required to be published
pursuant to Rule 26.2 of the Takeover Code have been made available on
Sainsbury's website at
http://www.j-sainsbury.co.uk/investor-centre/disclaimer/ and on the Home
Retail Group's website at
https://www.homeretailgroup.com/investor-centre/sainsburys-offer/: 
 
(d)        the Original Announcement; 
 
(e)        the Confidentiality Agreement; and 
 
(f)         the Amendment and Restatement Agreement. 
 
26.       Overseas shareholders 
 
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK and the availability of the Acquisition to
Home Retail Group 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 Home Retail Group Shareholders to vote their Home Retail Group
Shares with respect to the Acquisition at the Home Retail Group Meetings, or
to execute and deliver Forms of Proxy appointing another to vote at the Home
Retail Group Meetings on their behalf) 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. Home Retail Group
Shareholders who are in any doubt regarding such matters should consult an
appropriate independent professional adviser in the relevant jurisdiction
without delay. 
 
27.       Reserving the right to proceed by way of a Takeover Offer 
 
Sainsbury's reserves the right to implement the Acquisition by way of a
Takeover Offer for the entire issued and to be issued share capital of Home
Retail Group plc not already held by Sainsbury's as an alternative to the
Scheme (with the consent of the Panel and subject to the terms of the
Co-operation Agreement). In such an event, the Takeover Offer will be
implemented on substantially the same terms as set out in the Original
Announcement, including an acceptance condition of 90 per cent. of the shares
to which such Takeover Offer relates (or such lesser percentage (being more
than 50 per cent.) as Sainsbury's may decide with the consent of the Panel),
and the Proposed Capital Returns being structured as a Special Dividend. 
 
28.       General 
 
The Home Retail Group Shares and the New TopCo Shares will be acquired
pursuant to the Acquisition 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 the Original
Announcement, other than, in the case of New TopCo Shares, the Proposed
Capital Returns. 
 
If any dividend or other distribution is announced, declared, made, paid or
becomes payable by Home Retail Group plc or New TopCo in respect of the Home
Retail Group Shares or the New TopCo Shares on or after the date of the
Original Announcement and prior to the Completion Date, other than or in
excess of the Permitted Home Retail Group Payments, 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
Permitted Home Retail Group Payments, 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 Completion Date. 
 
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
Acquisition or otherwise. The New Sainsbury's Shares are not being offered to
the public by means of this announcement. Home Retail Group Shareholders are
advised to read carefully the Prospectus, the Scheme Document and the Form of
Proxy once these have been despatched. Any vote in respect of the resolutions
to be proposed at the Home Retail Group Meetings to approve the Scheme, the
Acquisition and related matters should be made only on the basis of the
information contained in the Scheme Document and the Prospectus. 
 
The New Sainsbury's Shares to be issued pursuant to the Acquisition 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
Restricted Jurisdiction or any resident of any Restricted Jurisdiction. The
New Sainsbury's Shares to be issued pursuant to the Acquisition are expected
to be issued pursuant to the exemption from registration provided by Section
3(a)(10) under the US Securities Act. 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. 
 
Morgan Stanley, UBS and Bank of America Merrill Lynch 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 Acquisition. Clifford Chance LLP is acting as legal adviser to
Sainsbury's. Deloitte is acting as reporting accountants to Sainsbury's. 
 
Bank of America Merrill Lynch is acting as financial adviser to Home Retail
Group plc. Linklaters LLP is acting as legal adviser to Home Retail Group
plc. 
 
The Acquisition will be subject to the Conditions and other terms as set out
herein and in Appendix 1 to this announcement, and to the full terms and
conditions which will be set out in the Scheme Document.  The Scheme Document
will also contain notices of the Court Meeting and the Home Retail Group
General Meeting and the expected timetable. The Panel has consented to Home
Retail Group plc posting the Scheme Document more than 28 days after this
announcement. It is expected that the Prospectus, containing further
information in relation to the New Sainsbury's Shares, will be published by
Sainsbury's at or around the same time as the Scheme Document. 
 
Enquiries 
 
Sainsbury's 
 
Duncan Cooper, Investor Relations                                           
Tel: +44 (0) 20 7695 0080 
 
Louise Evans/Anna Harland, Media Relations                             Tel:
+44 (0) 20 7695 7295 
 
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 
 
Brunswick (PR Adviser to Sainsbury's) 
 
Katie Ioanilli/Mike Smith                                                     
      Tel: +44 (0) 20 7404 5959 
 
Home Retail Group plc 
 
Richard Ashton, Finance Director                                              
 Tel: +44 (0)1908 600 291 
 
Mark Willis, Director of Investor Relations 
 
Bank of America Merrill Lynch (Financial Adviser to Home Retail Group plc) 
 
Jonathan Bewes                                                                
        Tel: +44 (0) 20 7628 1000 
 
Eamon Brabazon 
 
Geoff Iles 
 
Luke McMullan 
 
Finsbury (PR Adviser to Home Retail Group plc) 
 
Rollo Head                                                                    
           Tel: +44 (0) 20 7251 3801 
 
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 Acquisition or otherwise, nor
shall there be any sale, issuance or transfer of securities of Sainsbury's or
Home Retail Group plc pursuant to the Acquisition or otherwise in any
jurisdiction in contravention of applicable law. The Acquisition will be
implemented by means of the Scheme Document (or, in the event that the
Acquisition is to be implemented by means of a Takeover Offer, the Offer
Document), which will contain the full terms and conditions of the
Acquisition, including details of how to vote in respect of the Acquisition. 
 
Sainsbury's will prepare and publish the Prospectus containing information
about the New Sainsbury's Shares. Sainsbury's urges Home Retail Group
Shareholders to read the Scheme Document and the Prospectus carefully when
they become available because they will contain important information in
relation to the Acquisition and the New Sainsbury's Shares. Any decision or
vote in respect of the Acquisition should be made only on the basis of the
information contained in the Scheme Document (or, in the event that the
Acquisition is to be implemented by means of a Takeover Offer, the Offer
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 Acquisition 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 Acquisition, 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. 
 
Merrill Lynch International ("Bank of America Merrill Lynch"), a subsidiary of
Bank of America Corporation, is acting exclusively for Home Retail Group plc
in connection with the matters set out in this announcement and for no one
else and will not be responsible to anyone other than Home Retail Group plc
for providing the protections afforded to its clients or for providing advice
in relation to the matters set out in this announcement. 
 
Overseas jurisdictions 
 
The release, publication or distribution of this announcement in or into
jurisdictions other than the UK and the availability of the Acquisition to
Home Retail Group 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 Home Retail Group Shareholders to vote their Home Retail Group
Shares with respect to the Scheme and the Acquisition at the Home Retail Group
Meetings, or to execute and deliver Forms of Proxy appointing another to vote
at the Home Retail Group Meetings on their behalf) 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 Acquisition
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 Acquisition will not be
made, directly or indirectly, in, into or from any Restricted Jurisdiction
where to do so would violate the laws and/or regulations in that jurisdiction
and no person may vote in favour of the Acquisition from within any Restricted
Jurisdiction if to do so would constitute a violation of the laws  and/or
regulations of that jurisdiction. Accordingly, unless otherwise determined by
Sainsbury's or Home Retail Group plc or required by the Takeover Code, and
permitted by applicable law and regulation, copies of this announcement and
any formal documentation relating to the Acquisition are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded, distributed or
sent in, into or from any 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 any 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
Scheme 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. If the Acquisition is
implemented by way of a Takeover Offer (unless otherwise permitted by
applicable law and regulation), the Takeover Offer may 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 any
Restricted Jurisdiction and the Takeover Offer may not be capable of
acceptance by any such use, means, instrumentality or facilities or from
within any Restricted Jurisdiction. 
 
Further details in relation to Home Retail Group Shareholders in overseas
jurisdictions will be contained in the Scheme Document. 
 
Note to US holders of Home Retail Group Shares and Home Retail Group ADR
Holders 
 
US holders of Home Retail Group Shares and Home Retail Group ADR Holders
should note that the Acquisition relates to the securities of a UK company
with a listing on the London Stock Exchange and is proposed to be implemented
pursuant to a scheme of arrangement provided for under English company law. A
transaction effected by means of a scheme of arrangement is not subject to the
tender offer rules or the proxy solicitation rules under the US Exchange Act.
Accordingly, the Acquisition will be subject to UK procedural and disclosure
requirements and practices applicable to a scheme of arrangement involving a
target company in England listed on the London Stock Exchange, which are
different from the disclosure requirements of the US tender offer and proxy
solicitation rules. The financial information included in this announcement
and other documentation related to the Acquisition has been or will have been
prepared in accordance with International Financial Reporting Standards and
thus may not be comparable to financial information of US companies or
companies whose financial statements are prepared in accordance with generally
accepted accounting principles in the US. If Sainsbury's exercises its right,
in the circumstances provided for in this announcement, to implement the
Acquisition by way of a Takeover Offer, such Takeover Offer will only be made
in the United States if an exemption from the registration requirements of the
US Securities Act is available. 
 
The New Sainsbury's Shares to be issued pursuant to the Acquisition have not
been registered under the US Securities Actor under any laws or with any
securities regulatory authority of any state, district or other jurisdiction,
of the United States, and may only be offered or sold in the United States in
reliance on an exemption from registration requirements of the US Securities
Act including in the case of the proposed scheme of arrangement, Section
3(a)(10) thereunder. 
 
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
Acquisition, or determined if this announcement is accurate or complete. Any
representation to the contrary is a criminal offence in the United States. 
 
It may be difficult for US holders of Home Retail Group Shares and Home Retail
Group ADR Holders to enforce their rights and claims arising out of the US
federal securities laws, since Sainsbury's and Home Retail Group plc are
located in countries other than the United States, and some or all of their
officers and directors may be residents of countries other than the United
States. US holders of Home Retail Group Shares and Home Retail Group ADR
Holders may not be able to sue a non-US company or its officers or directors
in a non-US court for violations of US securities laws. Further, it may be
difficult to compel a non-US company and its affiliates to subject themselves
to a US court's judgement. 
 
Forward-looking statements 
 


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