Argos (2)

Sainsbury's has revealed that the owner of Argos and Homebase rejected a possible takeover bid in November.

Home Retail Group saw its share price soar 25% after the approach was made public, while Sainsbury's rose 5%.

Sainsbury's said a takeover would help it to boost sales, improve deliveries and allow to two companies to sell each other's products.

In a statement, the supermarket said: "The combination of Sainsbury's and Home Retail Group is an attractive proposition for the customers and shareholders of both companies."

Sainsbury's now has until 2 February to make a formal offer, but said it was "considering its position".

Last year, a deal between the two allowed Argos to open some concession stores in Sainsbury's supermarkets.

Sainsbury's has around 1,200 supermarkets and convenience stores in the UK. It co-founded Homebase but sold it in 2000 for £969 million. Home Retail Group has around 271 stores and is worth £1 billion based on its current share price.