The bid follows an approach last year, which was rejected. The supermarket giant’s offer for Home Retail Group - Argos’ owner - is equivalent to 161.3p per share.
Sainsbury expect the joining of the two companies to result in £120M in annual savings by 2019.
More importantly, it will strengthen the supermarket’s online presence as well as its ability to compete with rival traditional retailers - to “create a food and non-food retailer of choice for customers”.
However, any deal will depend on the finalisation of the sale of Homebase to Australian company Wesfarmers. The sale of the DIY chain has already been agreed, for £340m.
Sainsbury’s chief financial officer John Rogers said he was confident that shareholders of both Sainsbury’s and Home Retail would be in favour of the Argos deal.
The £120m in savings per year was also a “conservative” figure, he added.
It is expected that Sainsbury’s can offset £140m costs in the first three years by moving Argos stores into supermarkets when their leases expire. There will also be the opportunity to sell Sainsbury’s own-brand clothing and homeware throughout Argos’ 734 outlets.