It has been reported that other parties are interested in purchasing Home Retail Group, owners of Homebase and Argos, following the news that Sainsbury’s had made an offer.
Other potential suitors include former Tesco boss Sir Terry Leahy who is partnered with Clayton Dubilier & Rice, and investor group Apax, following the news that the Sainsbury’s offer had been rejected.
One of the chief executives at Home Retail Group has pointed out the company are in a great position for an easy takeover with a huge amount of money on the balance sheet and a debtor book worth £579 million.
Commenting, a private equity investor, said that private equity firms would have a lot to consider with potential bids.
“We took a look in January but we found it hard to make the numbers work. To reach the type of returns we would want you would have to see significantly higher sales growth from Argos than it is publicly targeting in its transformation programme.
“Yes, you can take money out of the debtor book but then you would have to find more funding for Argos financial services and it is not as simple as it seems. HRG’s balance sheet is quite strong but you can’t put much leverage on it, which is what private equity would look to do. We think it is a big risky deal and we can see how Sainsbury’s might be much better placed to make the synergies work.”
