Steinhoff International is set to acquire discount chain Poundland in a £597m deal.
The South African retail conglomerate made its first official approach for Poundland on the 15 June after buying a 23% stake in the single-price retailer. However, the board of Poundland subsequently snubbed Steinhoff’s proposal regarding a possible cash offer for the rest of the business.
However, in a statement this morning Poundland’s board said it would recommend Steinhoff’s improved all-cash bid of 222p per share to its shareholders. The offer, which values the business at £597m, is a premium of 39% on Poundland shares on 13 June, before Steinhoff made its interest known. Its share price has fallen from 418p in February 2015 to below 200p in recent months amid slowing sales growth and disruption caused by its takeover of 99p Stores.
Commenting on the offer, Darren Shapland, Chairman of Poundland, said: “The Poundland Board believes that SEAG’s all-cash offer presents Poundland shareholders with an opportunity to realise their shareholding at a certain and attractive price, securing earlier delivery of the Poundland Group’s medium term value than could be expected from the ongoing turnaround process against a background of increasing economic uncertainty in the UK and a more challenging trading environment.”
He added: “Steinhoff is a well-capitalised, international business with a clear and proven commitment to value retailing. They share our vision for the growth and expansion of Poundland and, as such, we believe they are a suitable and appropriate partner for our colleagues, our suppliers and stakeholders.”
Markus Jooste, CEO of Steinhoff, commented: “The Board of Steinhoff and its management team are enthusiastic about the opportunities that this transaction brings: we believe that there is significant merit in bringing Poundland into Steinhoff’s global network. Steinhoff is developing a fast-growing, price-led retail business across the UK and the rest of Europe. Poundland would be a complementary fit to this growth story.”
Steinhoff already owns Harveys, Pep&co, and Bensons for Beds in the UK as well as France-based furniture chain Conforama. It lost out in the takeover battle for the Home Retail Group earlier this year to Sainsbury’s. Analysts think Steinhoff will look to turn Poundland from a single-price retailer into a multi-price chain along the lines of B&M and Home Bargains.
- As we said on Monday, everything is negotiable…
- Following the Steinhoff takeover, as the Poundland brand has become synonymous with value, a move to a multi-price chain will happen…
- …only question being how long…