Sainsbury's is expected to raise its takeover bid for Argos to £1.5 billion today (Friday) as it fights off a rival South African offer.

The supermarket chain and rival bidder Steinhoff International have until 5pm today to confirm their bids for Home Retail Group, which owns Argos, or walk away.

Last month, Sainsbury's launched a £1.3bn cash plus shares bid for the retailer, but it is understood Steinhoff International, which owns Harveys and Bensons for Beds, has offered £1.42bn, equivalent to 175p per share.

Since Steinhoff first expressed its interest, Home Retail Group's share price has risen to 181p, which values the company at £1.47bn. Analysts expect Sainsbury's the raise its bid to at least 185p per share, or around £1.5bn.

However, earlier this week, Sainsbury's chief executive Mike Coupe said the takeover was not a "must do deal". He said: "There's a price and we won't go beyond that. We'll maintain a level of financial discipline... There is no reason why Sainsbury's won't be a successful company in the future without the Argos transaction taking place."