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Sainsbury’s takeover puts 200 Argos stores at risk

Supermarket chain Sainsbury’s proposed takeover of Home Retail Group (HRG), parent company of Argos, could see 200 stores closed as part of any streamlining operation.

The news comes as the London-headquartered retailer tries to convince the stock market of the value of any deal after having an initial offer, believed to be in the region of £1.1bn, turned down last week. HRG shareholders are holding out for an improved offer of £1.6bn which equates to 200p a share.

The news comes after Sainsbury’s reported a decline in sales of 0.7% in the third quarter.

Mike Coupe, Sainsbury’s Chief Executive, was keen to stress that any store closures would not entail job losses. The leases for nearly half of Argos’ 734 stores are up for renewal in the next four or five years and any leases that were deemed surplus to requirements would be incorporated into a nearby Sainsbury’s.

Making their case to the stock market, Chief Financial Officer John Rogers said: “This is a very strategically compelling opportunity and, if done at the right price, financially compelling but it’s not a must do deal, it’s not a deal that we have to do.

“We’ll look at this in a very financially disciplined way and we won’t overpay for this transaction.”