“Get a move on” was the message from Argos chief John Walden yesterday as potential buyers of the business J Sainsbury and Steinhoff continued to do… well, not a lot, ahead of what could be a bumper payday for HRG shareholders next Friday.
Actually, that’s not true. The two retail giants who want to buy Argos parent Home Retail Group (HRG) are currently doing due diligence and have until next Friday to make formal offers or walk away. But given that this whole issue has been rumbling on since last autumn and next week’s deadline is already an extension on the original one, Walden is pretty frustrated.
He said yesterday that the catalogue store chain’s business is being affected by on-going distraction around its future and revealed comparable sales for Argos down 2.6% to £4.1bn in the year to February. But he also said he was pleased with the progress the business was making as comp sales fell only 1.1% in the eight weeks to February 27.
Talking-up the business, Walden hinted that he’s expecting higher offers from the two rival suitors given Argos’s improving prospects and the cash balance HRG has from having recently sold the Homebase chain.
Yet he indicated price isn’t the only factor, saying: “What effect it might have on colleagues, the growth of colleagues in their careers [will be taken into account].”
That statement came after HRG’s Homebase sale resulted in the new owners sacking a number of top execs at the home improvement chain.
The story so far
So what’s been going on at HRG? Sainsbury, which has a deal to host Argos outlets in some of its supermarkets, approached HRG in November with a £1bn offer to buy the struggling Argos and improving Homebase units.
HRG said “no thanks, not enough,” which is perhaps no surprise given that it had paid over £900m for Homebase several years ago and that Sainsbury’s itself had once owned the chain, selling it in 2000 for almost £1bn!
In the New year, Sainsbury’s said it wanted HRG, with its main interest being Argos. HRG then sold Homebase to Australia’s Wesfarmers for £340m, thus solving one problem.
Sainsbury’s made a “possible” offer of around £1.3bn to buy the rest of the company, HRG’s board backed it and Sainsbury’s went on a charm offensive to convince its own shareholders that it hadn’t lost its marbles (as some people suggested it had).
But at the 11th hour last month, even bigger retail giant Steinhoff gatecrashed the party with its own £1.4bn “possible” offer. Neither of the two suitors have come up with a firm offer since then and look like they’re going to take it to the wire timing-wise, hence John Walden’s frustration. They have until end-of-play on next Friday. Will it be Argos’s very own Black Friday? Watch this space.