Chinese retail giant plots swoop for Argos

One of China’s biggest retailers has launched an audacious swoop for Argos as owner Sainsbury’s looks to offload the struggling chain.

Talks between Beijing-headquartered JD.com and Sainsbury’s, which has controlled Britain’s biggest seller of general goods for nearly a decade, are at an advanced stage, sources close to the talks said.

The two sides have been holding discussions about a possible deal for months, with the grocery giant setting up a secret team to work on a possible sale. JD.com is thought to be working with advisers at accountancy firm EY.

City sources said Sainsbury’s had recently taken steps to carve out the two businesses, including splitting out their respective commercial teams – a reshuffle that would make it easier to offload Argos to a new owner.

In January, Sainsbury’s said that Rhian Bartlett, its chief commercial officer, would work separately from Graham Biggart, Argos’s managing director, who was made chief strategy and supply officer.

Last month, Sainsbury’s said Argos’s “transformation team” would start reporting directly to Mr Biggart.

Any takeover of Argos is expected to be at a significant discount to the £1.4bn Sainsbury’s paid nine years ago. The chain was valued at £344m in Sainsbury’s most recent accounts.

The bid comes after JD.com failed in its attempt to buy the electrical retailer Currys last year.

If successful, a deal would bring an end to almost 10 years of ownership of the brand for Sainsbury’s, which engaged in a bidding war for Argos’s parent company Home Retail Group in 2016.

At the time, Sainsbury’s claimed the tie-up would allow for significant cost savings, a better range of products and faster delivery times for customers.

Mike Coupe, the former chief executive who led the acquisition, said adding Argos to its supermarkets would accelerate a strategy of serving customers “whenever, wherever they want to shop”.

However, Argos has since faltered as a slump in consumer confidence has hit spending on household appliances.

For JD.com, the deal would mark a major step by the Chinese giant as it seeks to gain a foothold on the British high street.

Though little-known in Britain, JD.com – or Jingdong as it is known in China – is one of the world’s biggest retail companies with annual revenues of nearly $160bn (£118bn).

It has set its sights on breaking into the British market in recent years, but walked away from an attempted acquisition of Currys after it became embroiled in a bidding war with the investment firm Elliott Advisors.

Richard Qiangdong Liu, the founder and chairman, is one of China’s richest people with a net worth said to be higher than $6bn.