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Steinhoff considers bid for Poundland Steinhoff considers bid for Poundland
(about 5 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, the South African retail conglomerate that owns Harveys and Bensons for Beds in the UK.
Shares in the British discount retail chain rose 6% to 208p on Wednesday, valuing the company at more than £530m, after Steinhoff said it was considering making an offer. Shares in the British discount retail chain rose 2% to 200p on Wednesday, valuing the company at more than £530m, after Steinhoff said it was considering making an offer. The rise followed a 27% jump in Poundland shares on Tuesday, driven by speculation about a bid.
The rise followed a 27% jump in Poundland shares on Tuesday, driven by bid speculation among traders. The move is the latest by the billionaire Christo Wiese to take a share of the UK’s burgeoning discount market. Wiese, who owns a 17% stake in Steinhoff, also has stakes in the cut-price fashion chain New Look and the grocer Iceland, and an investment in the Virgin Active gym chain via his Brait investment vehicle.
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 attempted to buy Home Retail Group, the owner of Argos, this year, but withdrew after looking over the company’s books in the face of competition from Sainsbury’s. It is also backing the former Asda boss Andy Bond’s two nascent discount chains Pep & Co and Guess How Much!, which have more than 50 stores between them.
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.” Steinhoff revealed on Wednesday that it had amassed a 22.78% stake in Poundland, in effect confirming that it was the buyer of most of a 15.3% stake sold by the US private equity house Warburg Pincus, Poundland’s biggest shareholder. The sale was revealed on Tuesday.
In the UK, Steinhoff already owns the furniture chain Harveys and Bensons for Beds, employing a total of more than 2,000 people. The South African group said it was “considering a possible offer” for Poundland, which would be made in cash. “There can be no certainty that any offer will be made and a further announcement will be made as appropriate,” the company said in a follow-up to an early morning statement, which it said had been made without Poundland’s consent.
It also has close links with the UK fashion retailer New Look through Christo Wiese, the South African billionaire investor with a majority stake in Steinhoff. Under takeover rules, Steinhoff has a deadline of 5pm on 13 July to announce a firm intention to make a bid for Poundland or walk away.
Wiese bought a 90% stake in New Look through his private equity vehicle Brait last year, shortly after buying an 80% stake in the Virgin Active fitness chain.
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 for Poundland 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.”
Poundland will publish its results on Thursday for the year ending 27 March 2016.Poundland will publish its results on Thursday for the year ending 27 March 2016.
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. Steinhoff’s approach comes at a difficult time for Poundland, which admitted in April that sales had been hit by 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 which are in the throes of a fierce price war. The company’s long-term chief executive, Jim McCarthy, also stepped down in April to be replaced by the former B&Q executive Kevin O’Byrne.
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.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.
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.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. Ultimately, however, the CMA 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 focuses 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. Steinhoff’s pursuit of Poundland is its third attempt this year to buy a European retailer. After losing out to Sainsbury’s in the battle to buy Home Retail Group, it also abandoned attempts to buy the French retailer Darty.