Argos owner backs $2 billion Sainsbury's takeover

LONDON, April 1 (Reuters) - British supermarket group Sainsbury (Amsterdam: SJ6.AS - news) 's said on Friday its 1.4 billion pounds ($2 billion) offer for Argos-owner Home Retail Group had been recommended by the board of the catalogue retailer.

Sainsbury's, Britain's second biggest grocer, was left a clear run to buy Argos, which sells electricals, jewelry and other general goods, when rival suitor South Africa's Steinhoff International withdrew last month.

Home Retail (Other OTC: HMRLF - news) shareholders will receive 0.321 new Sainsbury's shares and 55 pence in cash for each share, plus an additional cash payment of 27.8 pence from the earlier disposal of the group's other chain, Homebase, and in lieu of a final dividend, Sainsbury's said.

($1 = 0.6973 pounds) (Reporting by Paul Sandle; editing by Kate Holton)