South African retail holding company Steinhoff will strengthen its presence in the British retail sector after agreeing a £597m (€716m) takeover of discount chain Poundland, it said yesterday.
Steinhoff, which already owns the Bensons Beds and Harvey’s furniture chains in Britain, lost out in two other takeovers in Europe this year.
It failed to secure Britain’s Home Retail, which owns Argos, and was unsuccessful in a bid for Darty in France.
It is the biggest takeover of a listed British company since last month’s Brexit vote. The South African group already owns 23.6% of Poundland, which in the UK sells everything for a pound.
Poundland listed at 300p in 2014. But its shares have lost 42% of their value over the last year, hit by subdued trading, adverse currency moves and the distraction of integrating the 99p Stores chain it bought for £55m last year.
Last month Poundland reported a 13.5% fall in full-year profit.
Poundland’s board has recommended Steinhoff’s offer that will see it pay 222p in cash for each Poundland share.
The offer comprises an offer price of 220p for each Poundland share as well as a final dividend of 2p per share. The price represents a premium of 39% to Poundland’s share price on June 13 - the last day prior to the first purchase of Poundland shares by Steinhoff.
“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,” said Steinhoff chief executive Markus Jooste.
Britain’s vote to leave the EU has sent the pound to its lowest level versus the dollar in three decades.
Analysts said weaker sterling, Poundland’s lower share price and a subdued economic outlook for the UK made the retailer’s valuation more enticing. Poundland operates outside of the UK - including in Ireland - under the Dealz brand.
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