The Competition and Markets Authority (CMA) said on Friday that it was investigating whether the deal could hurt competition in the UK. (http://bit.ly/1XWfZ0u)

The deal, which was backed by Home Retail's board last month, will help Sainsbury diversify its grocery-heavy portfolio, analysts say.

Home Retail sells electronics, homes appliances, jewellery and other goods under its Argos chain and home improvement products through its Homebase-branded stores.

The CMA said it would decide on the matter by July 25.

The watchdog is also investigating German drugs distributor Celesio AG's 125 million pound acquisition of Sainsbury's pharmacy business. A decision is expected on Aug. 8. (http://bit.ly/1ON8JN2)

(Reporting by Mamidipudi Soumithri in Bengaluru; Editing by Kirti Pandey)

Stocks treated in this article : J Sainsbury plc, Home Retail Group Plc