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Steinhoff considers bid for Poundland Steinhoff considers bid for Poundland
(about 2 hours later)
Poundland has been targeted for a takeover by Steinhoff, a South African retail conglomerate.Poundland has been targeted for a takeover by Steinhoff, a South African retail conglomerate.
Shares in the British discount retail chain rose 6% to 208p on Wednesday morning, valuing the company at more than £530m, after Steinhoff said that it was considering making an offer. The rise followed a 27% rise in Poundland shares on Tuesday, driven by bid speculation among traders. Shares in the British discount retail chain rose 6% to 208p on Wednesday morning, valuing the company at more than £530m, after Steinhoff said it was considering making an offer.
Steinhoff said in a statement: “The board of Steinhoff notes the recent share price movement in the share price of Poundland Group Plc and confirms that it is considering a possible offer for the entire issued share capital of Poundland. The rise followed a 27% jump in Poundland shares on Tuesday, driven by bid speculation among traders.
“This announcement has been made without the consent of Poundland. A further announcement will be made when appropriate in due course.” It emerged that the US private equity firm Warburg Pincus, which is Poundland’s biggest shareholder, had sold down most of its 15.3% stake in the retailer to an unknown buyer.
Steinhoff has a “put up or shut up” deadline of 5pm on 13 July to announce a firm intention to make a bid or walk away. Steinhoff said on Wednesday it was “considering a possible offer” for Poundland. “This announcement has been made without the consent of Poundland. A further announcement will be made when appropriate in due course.”
Under takeover rules, Steinhoff has a “put up or shut up” deadline of 5pm on 13 July to announce a firm intention to make a bid or walk away.
Poundland issued a brief statement in response to Steinhoff’s approach, urging investors to do nothing. It said: “Poundland shareholders are strongly advised to take no action. The company will issue a further statement if and when appropriate.Poundland issued a brief statement in response to Steinhoff’s approach, urging investors to do nothing. It said: “Poundland shareholders are strongly advised to take no action. The company will issue a further statement if and when appropriate.
“There can be no certainty that a firm offer will be made, nor as to the terms on which any firm offer might be made. This announcement is being made by Poundland without the prior agreement or approval of Steinhoff.”“There can be no certainty that a firm offer will be made, nor as to the terms on which any firm offer might be made. This announcement is being made by Poundland without the prior agreement or approval of Steinhoff.”
Steinhoff’s approach comes at a difficult time for Poundland, which admitted in April that sales have been hit following the £55m purchase of its loss-making rival, 99p Stores. Poundland will publish its results on Thursday for the year ending 27 March 2016.
It is also grappling with dwindling numbers of shoppers on Britain’s high streets and competition from supermarkets in the midst of a fierce price war. Steinhoff’s approach comes at a difficult time for Poundland, which admitted in April that sales have been hit after the £55m purchase of its loss-making rival 99p Stores. It is also grappling with dwindling numbers of shoppers on Britain’s high streets and competition from supermarkets in the midst of a fierce price war.
With the takeover of 99p Stores now complete, following a six-month investigation by the competition regulator, Poundland has more than 900 stores in the UK and Ireland. With the takeover of 99p Stores complete after a six-month investigation by the competition regulator, Poundland has more than 900 stores in the UK and Ireland.
Poundland will publish its results for the year ending 27 March 2016 on Thursday. The Competition and Markets Authority allowed the takeover to go ahead after dropping earlier objections that a deal would be bad for customers, reducing competition in more than 90 locations.
However the CMA ultimately concluded that low-price retailing was established in the UK and that the combined company would meet competition from Poundworld, Wilko, B&M and other value chains, as well as Tesco and Asda among the supermarkets.
Steinhoff operates in Europe, Africa and Australasia, selling household goods, clothing, footwear and homeware and focused on the budget end of the market.Steinhoff operates in Europe, Africa and Australasia, selling household goods, clothing, footwear and homeware and focused on the budget end of the market.
It is listed on the Frankfurt stock exchange, with a secondary listing in Johannesburg, and a market value of about €20bn (£16bn). It employs about 105,000 people.It is listed on the Frankfurt stock exchange, with a secondary listing in Johannesburg, and a market value of about €20bn (£16bn). It employs about 105,000 people.
Steinhoff’s pursuit of Poundland is its third attempt this year to buy a European retailer. It lost out to Sainsbury’s in the battle to buy the owner of Argos, Home Retail Group, and abandoned attempts to buy the French retailer Darty.