Argos-owned group an attractive opportunity for Sainsbury's, but a deal is not nailed on

The great surge in Home Retail Group's share price today tells you one thing above all others: not many investors see this company as having a particularly bright, independent future.

An enthusiastic looking suitor waits in the wings. Sainsbury's first proposal, we learned today, was delivered in November, weeks after Home Retail (which owns both Argos and Homebase) had delivered a pre-Christmas profit warning.

Go back five years and Argos in particular looked not long for this digital world. A new age of internet retailing had dawned and those hefty catalogues suddenly looked like dead weights

What happened next caught many by surprise. Argos came up with "click and collect", moved the catalogue online, revamped its stores and closed a great many others. Argos's fortunes improved but while Home Retail has survived the group hasn't thrived. Now Homebase too looks vulnerable as Britain's interest in DIY apparently continues to wane.

Sainsbury's spies an opportunity. The store networks are complimentary, so is the range of merchandise (from groceries to toys and electricals) and Argos's "same day delivery" expertise would help Sainsbury's up its game just as mighty Amazon begins its assault on the UK groceries market.

There would be some overlap, of course, but 180,000 staff (160,000 of them from Sainsbury's) could come together as one in the reasonable expectation that there would be minimal job losses.

If the deal happens. Argos has spurned Sainsbury's first approach. "Hard to get" seems a fair enough tactic at this stage in the game but there's not very much room for manoeuvre.

UK Takeover Panel rules mean Sainsbury's has until 5pm on February 2 to make an offer or walk away. A deal is not nailed on. Shares in Home Retail Group closed up 41% valuing the company at more than £1 billion. That's quite a price for a company that looks down on its luck again.