The board of Argos owner Home Retail has agreed to unanimously recommend Sainsbury's takeover offer, the FTSE 100-listed retailer said on Friday (1 April).
Sainsbury's said the agreement represents an indicative value of 143.7p per Home Retail Group Share and values Home Retail Group plc's issued ordinary share capital at approximately £1.2bn.
The offer and the proposed capital returns together represent an indicative value of 171.5p per Home Retail share and value the company's issued ordinary share capital at approximately £1.4bn.
The offer and the proposed capital returns together represent a premium of approximately 74% to the closing price of 98.7p per Home Retail share on 4 January.
Sainsbury's chairman David Tyler said the acquisition will be carried out through a scheme of arrangement, in a bid to facilitate a speedy completion of the transaction.
"The combined business will offer a multi-product, multi-channel proposition, with fast delivery networks, which we believe will be very attractive to customers and which will create value to both sets of shareholders," he added.
Sainsbury's added that under the terms of the deal, Home Retail shareholders will receive 0.321 new Sainsbury's shares and 55p in cash as well as 25p per Home Retail share, reflecting the £200m return to shareholders in respect of the Homebase Sale as announced by the group on 18 January 2016.
Additionally, shareholders will also receive a 2.8p per Home Retail share in lieu of a final dividend in respect of Home Retail's financial year, which ended on 27 February.
"Argos is both an icon of the British High Street and also a leader in the digital transformation of UK retailing," said John Coombe, Chairman of Home Retail Group. "We are pleased that Sainsbury's has recognised our progress and our potential with its recommended acquisition of Home Retail."