London-based supermarket store J Sainsbury PLC agreed Tuesday on the preliminary terms of a deal to buy Home Retail Group PLC for 1.32 billion British pounds ($1.9 billion), just hours before a deadline from the U.K. takeover panel ended. Sainsbury's had approached the London-based Home Retail previously in November for a cash-and-stock offer that was rejected.

Sainsbury's will pay about 161.3 pence in cash and stock for a share of Home Retail, 63 percent more than the price prior to the discussions. Sainsbury's believes that the deal will allow it to boost its earnings a share and will lead to profit synergies of at least 120 million pounds ($172 million) in the third year, Bloomberg reported.

The deal would give Sainsbury's more than 800 Argos stores and a bigger product delivery system. The agreement also includes the 200 million pounds ($287 million) realized from the sale of Home Retail’s Homebase chain to Australia’s Wesfarmers last month.

Sainsbury’s CEO Mike Coupe said: “Our customers want us to offer more choice and for that choice to be faster than ever, driven by the rise of mobile phone and digital technology. It will enhance both businesses in the way customers respond,” the Guardian reported.

Sainsbury’s also plans to incur a cost of 140 million British pounds ($201 million) in the first three years, the BBC reported. If a deal goes ahead, shareholders would own about 12 percent of the combined group.

Home Retail said, according to BBC, that it “believes in the prospects for the standalone company” and added that the possible offer allows an “attractive opportunity” for its shareholders.

The companies extended a deadline by the U.K. takeover panel for a formal offer to Feb. 23, Bloomberg reported. An initial deadline of 1700 GMT Tuesday (12 p.m. EST) was set by the panel for Sainsbury’s to either make an offer or withdraw.

Sainsbury's is offering 0.321 of its shares and 55 pence in cash for each share of Home Retail and it will also pay 25 pence a share to reflect the sale of Homebase. Sainsbury’s, the second-largest supermarket chain in the U.K. after Tesco, will also pay 2.8 pence instead of the final dividend, the Wall Street Journal reported.

“The numbers stack up well and we continue to think that the commercial logic of the deal is sound from both defensive and offensive senses,” James Collins, an analyst at Stifel, a stock investment company, said, according to Bloomberg.

Home Retail confirmed in November that it had got Sainsbury’s initial offer, for which the price was not disclosed. It said at the time that the supermarket chain had undervalued the company and its long-term prospects, according to the Journal.