Sainsbury’s takeover plans for Home Retail Group have been thrown into disarray following a significantly higher £1.4bn takeover approach by South African retail group Steinhoff.

Steinhoff, which owns UK furniture firm Harveys Beds, has made an offer worth 175p a share for the Argos owner.

The offer has been structured with a 147.2p-a-share cash payment on top of the 25p-a-share proceeds Home Retail Group was to hand its shareholders from the sale of Homebase and a 2.8p final dividend.

Steinhoff’s approach is 8.5pc higher than Sainsbury’s £1.3bn offer, worth 161.3p a share. The supermarket's proposal was made up of a 55p cash payment, 0.321 Sainsbury’s shares and boosted with the payments from Home Retail Group.

Steinhoff is listed on the Frankfurt and Johannesburg stock markets with a market value of €18bn.

The rival bidder has said it is still supportive of Home Retail Group's sale of Homebase to Wesfarmers. "Steinhoff is making this announcement to ensure that Home Retai Group shareholders are fully informed while making any decision in connection with the possible offer announced by J Sainsbury on February 2, 2016."

Sainsbury's had been working towards a bid deadline of February 23.