Sale of Homebase

Sainsbury(J) PLC
22 December 2000


J Sainsbury plc ('Sainsbury's') sells Homebase for £969 million and re-invests
£31 million for an 18% equity stake


Sainsbury's today announces that agreement has been reached to sell its
existing Homebase DIY business to Schroder Ventures for £750 million.   In
addition, Sainsbury's has also sold 28 non-trading development sites for large
DIY stores to Kingfisher plc for £219 million in cash.  Sainsbury's will be
investing £31 million in Homebase to retain an 18% equity stake.

Total consideration for the sale to Schroder Ventures consists of £416 million
in cash and a vendor loan note of £75 million. Additionally, certain of
Homebase's freehold properties independently valued at £259 million have been
transferred to Sainsbury's by Homebase and leased back to Homebase. 
Sainsbury's intends to dispose of these freehold properties over a period of
time using its proven expertise in sale and leaseback transactions.

Sir Peter Davis, group chief executive of Sainsbury's said  'Through this
review we have sought to release maximum value from our interests in Homebase.
I am delighted that we have agreed a solution which will capitalise on
Homebase's strengths in home enhancement and its loyal customer base. Our
confidence in the future prospects of Homebase is reflected by our ongoing
equity investment.

'The Board is extremely grateful to the management and staff of Homebase for
their co-operation in the strategic review and their efforts in building, over
nearly twenty years, a very fine business.
 
'Our priority now is to focus on food retailing and to devote our management
and financial resources to the profit recovery in our UK supermarket business
and in becoming First Choice for food shopping.'

The net book value of the assets sold to Schroder Ventures and Kingfisher plc
amounted to £614 million as at 14 October 2000.  The sale of Homebase and the
non-trading development sites will give rise to an exceptional credit
estimated to be £253 million before charging to the profit and loss account
goodwill previously written off of £148 million.  This will therefore result in
a net exceptional credit estimated to be £105 million of which £68 million
(based on current valuation) will be realised on disposal of the properties.  In
the period to 1 April 2000, Homebase reported turnover of £1.2 billion and an
operating profit of £57.0 million.

Completion of the sale to Schroder Ventures is conditional on clearance by the
European Commission and is expected to take place in the first quarter of
2001.  The sale to Schroder Ventures is subject to a working capital
adjustment at completion.  The sale to Kingfisher plc is unconditional, has
been completed and the consideration is subject to a refund mechanism in the
event that any of the development sites are not completed within specified
time limits.

UBS Warburg has acted as sole financial adviser to Sainsbury's in connection
with the disposal of its interest in Homebase.

Contact
-------

Sainsbury's:
- Media                  Jan Shawe          020 7695 6469
                         Mandy Pursey       020 7695 6329

- Analysts/Investors     Roger Matthews     020 7695 6025

UBS Warburg:             Hew Glyn Davies    020 7567 8000
                         Paul Morris        020 7567 8000


Notes to Editors


1.       The total consideration is satisfied as follows:

                                   Schroder       Kingfisher     Total
                                   Ventures
                                   £m             £m             £m

       Cash (a)                   416            219            635

       Vendor Loan Note (b)        75              -             75

       Freehold properties        259              -            259

                                  750            219            969
                                  ===            ===            ===

a)       The cash consideration payable by Schroder Ventures is stated net of
certain liabilities retained by Sainsbury's.
b)       The vendor loan has a total coupon of 10 per cent, 2 per cent of
which is payable in cash and 8 per cent is rolled up and payable on exit.


2.       The total purchase price represents a multiple of 17.0x (before
exceptional items) based on an audited EBIT for the year ended 1 April 2000 of
£57 million.

3.       Debt financing for the acquisition of Homebase by Schroder Ventures
has been arranged by UBS Warburg.