The supermarket retailer said the move will create a “multi-product, multi-channel business”.
The announcement has been made after a nearly four month battle that began on 5th January, when Sainsbury’s first disclosed its interest.
The deal comes after South African retailer Steinhoff International Holdings NV withdrew from the battle to acquire the Argos owner.
The takeover will bring an end to almost 10 years of independence for the Home Retail Group.
Sainsbury’s will pay 0.321 new shares and 55p per share in cash to buy Argos, and Home Retail Group shareholders will hold 12% of the combined business.
David Tyler, chairman at Sainsbury’s, said: “The combined business will offer fast delivery networks, which we believe will be very attractive to customers and which will create value to both sets of shareholders.”
Home Retail Group chairman, John Coombe, added: “We are pleased that Sainsbury’s has recognised our progress and our potential with its recommended acquisition of Home Retail Group. Argos is both an icon of the British high street and also a leader in the digital transformation of UK retailing.”
The deal is expected to be completed in the third quarter.