J Sainsbury PLC (LSE:SBRY) confirmed talks with China's JD.com Inc (NASDAQ:JD) about a potential sale of Argos, which it bought in 2016.
The grocer said on Saturday that discussions were underway, and then put out a statement on Monday saying it had now walked away from the talks.
As the discussions progressed, it said, JD's demands for a potential acquisition were "not in the best interests of Sainsbury's shareholders, colleagues and broader stakeholders".
Two days earlier, Sainsbury's said a transaction with JD.com "would accelerate Argos’ transformation. JD.com would bring world-class retail, technology and logistics expertise and invest to drive Argos’ growth and further transform the customer experience".
With Argos the third most visited retail website in the UK, the group said it is "committed to delivering the strongest and most successful future for Argos customers and colleagues".
Bought for £1.1 billion nine years ago, Argos is currently undergoing a transformation strategy that is delivering good progress, the FTSE 100 company said, with actions to improve its product range, digital capabilities and "relevance".
"Argos has traded in line with expectations over the summer, helped by good weather, with H1 sales and profitability stronger against a period last year when Q2 sales were boosted by clearance activity."
Sainsbury's reiterated previous guidance to deliver retail underlying operating profit of around £1 billion and free cash flow of more than £500 million in the current financial year.
The shares rose over 5% to 322.8p, around four-year highs.
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