Steinhoff Increases Offer For Poundland

Steinhoff International has increased its offer for Poundland to £610.4m, compared with a £597m offer that had been agreed between the two companies last month.

The move comes amid reports that US activist hedge fund Elliott Advisors was pushing for a higher offer after increasing its stake in Poundland to around 17.5% just days after the original 220p per share cash offer plus a 2p dividend was made. The new offer consists of 225p per share plus the final dividend of 2p per share, slightly short of the 10p per share increase Elliott is said to have wanted. However, it still represents a 43% premium to Poundland’s share price before Steinhoff announced its interest in the group.

Poundland has agreed to the improved takeover offer which Steinhoff said was final.

Darren Shapland, Chairman of Poundland, commented: “The Poundland Board is pleased to recommend SEAG’s increased all-cash offer which presents Poundland shareholders with an opportunity to realise their shareholding at an improved price and on an enhanced premium to Poundland’s undisturbed share price.

“Steinhoff is a well-capitalised, international business with a clear and proven commitment to value retailing. Steinhoff continues to 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, suppliers and stakeholders.”

Markus Jooste, CEO of Steinhoff, added: “By offering Poundland shareholders an improved cash offer we aim to bring certainty to the transaction recognising the strength and value of the business and its management team.”

He added: “We believe there is significant merit to both Poundland and Steinhoff in bringing Poundland into our global operations, and the Steinhoff directors and management are enthusiastic about the related opportunities that will arise.”

Elliott is the second largest shareholder in Poundland behind Steinhoff. The deal needs 75% approval from shareholders to go ahead, meaning Elliott would not need much support from other investors to thwart Steinhoff if it decides the improved offer is not sufficient.

Steinhoff already owns Harveys, Pep&co, and Bensons for Beds in the UK as well as France-based furniture chain Conforama. 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.

NAM Implications:
  • NAMs have little to lose by assuming a takeover at the latest offer price…
  • …and the probability of Poundland becoming a multi-price chain along the lines of B&M and Home Bargains
  • Worth keeping in mind that the higher the cost of takeover, the greater the pressure to recover such incremental cost via the suppliers, in a flat-line market…