Sainsbury’s pulls plug on Argos JD.com sale talks as shares soar
Sainsbury’s hopes of offloading Argos to Chinese e-commerce giant JD.com have collapsed just 24 hours after confirming it was in talks.
On Saturday, the supermarket chain said it was in discussions over a potential sale of its general merchandise arm, claiming the deal could “accelerate Argos’ transformation”.
But by Sunday, the grocer announced negotiations had ended after JD.com sought a “materially revised set of terms and commitments” that Sainsbury’s said were not in the best interests of shareholders, colleagues or wider stakeholders.
It is understood JD.com, one of China’s largest retailers and previously linked to a failed takeover bid for Currys, had been expected to bring logistics and technology expertise to Argos, which has struggled for growth since being acquired by Sainsbury’s for £1.1bn in 2016.
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Argos is the UK’s second largest general merchandise retailer, with almost 200 standalone stores and more than 1,100 collection points, most within Sainsbury’s supermarkets.
However, once known for its thick catalogues and high-street outlets, the business has shifted online and seen the closure of hundreds of standalone sites in recent years.
Meanwhile Sainsbury’s latest accounts valued Argos at £344m, far below the original acquisition price, with falling profits weighing on the wider group’s performance, with the supermarket giant already shutting Argos’s Milton Keynes head office and two distribution centres as part of a cost-cutting programme.
Yet, despite the collapse of the talks, Sainsbury’s shares surged nearly 5% in early trading on Monday to 322p, their highest level in more than a decade. The shares had started the year at 275p and slumped to 228p in April before rebounding.
Speaking earlier in the year, Sainsbury’s said it remains focused on delivering its “Next Level” strategy, including extending ranges, enhancing digital capabilities and improving Argos’s relevance while cutting costs.
