(MENAFN- AFP) British supermarket group Sainsbury said Tuesday that Home Retail Group, owner of catalogue chain Argos and home improvements retailer Homebase, has rejected its takeover approach.
Sainsbury revealed in a statement that it had made a cash-and-shares bid approach in November for HRG but gave no indication of the price.
"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," it added.
Sainsbury said the move would "bring together two of the UK's leading retail businesses, with complementary product offers, focused on delivering quality products and services at fair prices, through an integrated, multi-channel proposition".
The group added it was considering its position, but cautioned that there was no certainty that this would result in a formal offer.
Sainsbury now has until February 2 to decide whether to make a formal offer, under British takeover rules.
In reaction to Tuesday's news, HRG's share price rocketed 36.78 percent to 135 pence in mid-afternoon London trade, valuing the group at about £1.1 billion ($1.6 billion, 1.5 billion euros).
Sainbury stock meanwhile slid more than 5.05 percent to 242.40 pence.
In recent years, Britain's supermarket sector has suffered from fierce competition from German-owned discounters Aldi and Lidl.
At the same time, Sainsbury remains locked in a bitter supermarket price war with Britain's biggest retailer Tesco and WalMart-owned group Asda.
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