J Sainsbury PLC (LSE:SBRY) has agreed to sell Argos to Swift Partners for cash proceeds of at least £120 million, allowing the retailer to focus on its core food business and Next Level Strategy.
Swift Partners is a newly established company backed by Richard Pennycook, Trevor Strain, Matt Truman and True Capital. The business will acquire Argos and invest in its future growth while working alongside the existing management team.
Sainsbury's expects to receive at least £70 million when the transaction completes, which is expected in February 2027. A further £50 million in deferred consideration is expected over the following three years. The proceeds are expected to be offset by separation costs.
The retailer said the transaction is expected to have a broadly neutral impact on underlying operating profit and be low single-digit accretive to underlying earnings per share. Lease-adjusted net debt is expected to reduce by around £250 million, while underlying retail free cash flow is expected to improve.
Chief executive Simon Roberts said: "For Sainsbury's, this is a further step forward in our strategy. Having rebuilt the core strengths of our food business, this agreement allows us to focus all our resources and investment on the significant opportunities ahead."
Sainsbury's and Argos have entered into long-term commercial agreements covering Argos stores inside Sainsbury's, Collection Points, Nectar, Nectar360 and Habitat. The agreements are intended to support continuity for customers, colleagues and suppliers while providing ongoing income for Sainsbury's.
The retailer reaffirmed its guidance for FY27 underlying operating profit of between £975 million and £1.08 billion and retail free cash flow of more than £500 million.
The transaction remains subject to customary regulatory approvals and other completion conditions. Full separation of the businesses is expected by February 2029.
