Argos sale collapses after Sainsbury’s ends talks with Chinese buyer

A Chinese takeover of Argos has collapsed after its owner Sainsbury’s walked away from talks just 24 hours after confirming it planned to sell the retailer.

On Sunday, Sainsbury’s said it had ended discussions after Chinese retail giant JD.com issued a “materially revised set of terms and commitments” which were “not in the best interests of Sainsbury’s shareholders, colleagues and broader stakeholders”.

As a result, the supermarket chain said the talks with the Beijing-headquartered firm had been terminated.

A spokesman for JD.com said the company had been “unable to agree commercial terms with Sainsbury’s”.

The about-turn comes just a day after The Telegraph revealed the two companies were nearing a deal for Argos.

The abrupt end to the discussions will raise questions about why talks broke down so quickly.

One City source said price may have been the deciding factor, and it was common for buyers to try and chip away at the valuation once transactions had become public.

Another factor may have been the possible intervention of Daniel Kretinsky, the Czech billionaire, who is the second largest shareholder in Sainsbury’s, with a stake of 10pc.

Mr Kretinsky, who this year completed a £3.6bn takeover of Royal Mail, operates a number of postal and logistics companies across Europe and is planning to create a new e-commerce empire to rival Amazon.

JD.com already owns a number of UK warehouses and its entrance into the retail market would pose a direct challenge to Mr Kretinsky’s businesses. A source close to Sainsbury’s denied the tycoon had any involvement in the decision.

The collapse of the talks will raise questions over the strategy of Sainsbury’s chief executive Simon Roberts.

Confirming the talks on Saturday, Sainsbury’s said a sale to JD.com “would accelerate Argos’ transformation”, and that any deal would include commitments from the Chinese company “for the benefit of customers, colleagues and partners”.

However, on Sunday, Sainsbury’s insisted it was making good progress in its turnaround plan for Argos, saying it was taking action to extend the retailer’s range, enhance its online offering and make it more relevant to customers.

It added that Argos had traded in line with expectations over the summer, thanks in part to good weather.

The aborted talks mark a setback for Sainsbury’s, which has refocused on its food offering in recent years as demand for household goods from Argos has slumped.