City awaits next move in Sainsbury’s bid for Argos

The City is eager to hear if Sainsbury’s will maintain its bid interest in Argos owner Home Retail Group this week - while Tesco, Morrisons, and Debenhams all report key Christmas trading figures.

The City will want to know whether Sainsbury’s will make another approach for £1 billion-rated Home Retail when the supermarket posts a trading update on Wednesday.

The country’s second largest grocer recently revealed it made a cash and shares approach for Home Retail, which also owns DIY chain Homebase, that was rebuffed in November.

But the supermarket said: “The board of Sainsbury’s believes the combination of Sainsbury’s and Home Retail Group is an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation.”

However, a number of the grocer’s largest investors question whether a tie-up between the pair would generate substantial cross-selling opportunities, as Sainsbury’s claims.

Added to this former Tesco boss Sir Terry Leahy is reported to be mulling a rival bid for Home Retail, with the backing of US buyout group Clayton Dubilier & Rice.

Turning to Sainsbury’s Christmas trading, the City expects the grocer to be the strongest performer of the big four players - the others being Tesco, Asda and Morrisons - but still sees like-for-like sales falling by 0.7 per cent for the 14 weeks covering Christmas, compared to a year ago.