Argos boss urges suitors to get on with it and make formal bids

Home Retail chief says offers from Sainsbury’s and Steinhoff have been a distraction

Sainsbury's bid for the Argos owner Home Retail Group has been gatecrashed by the South African furniture seller Steinhoff (PA)

Sainsbury’s and the South African retail group Steinhoff need to decide quickly whether to make a formal bid for Argos, according to the boss of the catalogue chain.

Both companies are eyeing a takeover but have yet to put forward a formal offer, and the chief executive of Argos’s parent Home Retail Group, John Walden, claimed the uncertainty was hitting his business and must be sorted out soon.

Mr Walden said: “Everybody is interested to see this come to an end one way or another, but we have to let the process run its course. The activity in the business … hasn’t been without distraction.

In January Home Retail agreed to sell its other operation, the DIY chain Homebase, to the Australian retailer Wesfarmers for £340m, with the new owners sacking the current operating board and replacing it with their own directors.

Mr Walden said he was disappointed with that decision, adding: “You would not expect me to be thrilled about that. I think we had and still have great people at Homebase and they will be successful in their careers whatever they do.”

The plea for formal bids came as Home Retail revealed that sales at Argos fell 2.6 per cent on a like-for-like basis in the year to 27 February, to £4.1bn. Homebase improved by 5.2 per cent to £1.4bn but only because of dozens of store closures.

Cash on the group’s balance sheet, however, was up by more than the City expected, at £310m excluding disposals at the year-end.

Mr Walden said sales of electricals goods continued to fall, particularly of computer games and white goods such as fridges and washing machines. He added: “We have seen some success in categories that have previously been problematic, like TVs.”

But all eyes are on what Sainsbury’s and Steinhoff do next. The UK’s second-biggest supermarket last month made a “possible” cash and paper offer now worth 165.4p a share or £1.35bn, which the Home Retail board has accepted in principle. Steinhoff made a “possible” cash offer a few weeks later of 175p or £1.4bn. Mr Walden yesterday said that bid was “attractive” and the two companies were now carrying out due diligence on Argos.

Both have until 5pm next Friday to make a formal offer or walk away. However, there have already been extensions to the original approach from Sainsbury’s.

Shares in Home Retail yesterday closed up 0.2p at 180.2p, indicating that traders are expecting higher bids.

Mr Walden would not say whether he hopes to stay on with the business if it is sold. He added that there is little he can tell staff about the new owner’s plans, which are likely to include closing stores.