Watchdog clears Sainsbury’s deal to buy Argos owner

Sainsbury's has been given the green light to buy Argos. Picture: Neil Hanna
Sainsbury's has been given the green light to buy Argos. Picture: Neil Hanna
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Sainsbury’s £1.4 billion takeover of Argos owner Home Retail Group has been approved by the competition regulator.

The supermarket chain welcomed today’s decision by the Competition & Markets Authority (CMA) to “unconditionally” clear the acquisition.

The CMA had been looking into whether the tie-up with Home Retail could result in a “substantial lessening of competition”, but today said it had decided not to refer the deal for a full investigation.

READ MORE: Sainsbury’s gets go-ahead for Argos acquisition

Retail analyst Nick Bubb said: “Sainsbury’s management were always confident that the CMA would not be a problem, so the Argos deal can grind on to its much-awaited completion in a few weeks’ time.”

The approval comes after an eventful start to the year for Home Retail, which sold off its DIY chain Homebase to Australian conglomerate Wesfarmers for £340 million and then agreed to the takeover by Sainsbury’s.

Argos posted its best sales performance for two years last month, with total sales rising 2.6 per cent to £868m, thanks to a surge in online sales.

Home Retail chief executive John Walden will leave the group once the acquisition completes. He will be replaced by Sainsbury’s finance chief financial officer John Rogers.

Sainsbury’s said the takeover still needs the approval of the Financial Conduct Authority and the backing of Home Retail’s shareholders during a court and general meeting on Wednesday. It now expects the tie-up to be complete by early September.

A spokesman said: “We are pleased that the CMA has unconditionally cleared our proposed acquisition of Home Retail Group.

“The combination of both businesses will create a multi-product, multi-channel proposition with fast delivery networks, giving customers what they want, whenever and wherever they want it.”

The grocery sector is locked in a price war, which has seen the “big four” chains slash their prices to protect market share from the rise of German discounters Aldi and Lidl.

Last month, Sainsbury’s reported a 0.8 per cent drop in like-for-like sales for the 12 weeks to 4 June. That marked a setback after the previous quarter saw a return to like-for-like growth for the first time in more than two years.