South African goup Steinhoff buys Poundland for £597m

Steinhoff, backed by South African billionaire Christo Weise, failed in its bids earlier this year to buy Argos and electricals retailer Darty, reports The Telegraph.

Poundland’s board announced today it would recommend Steinhoff’s all-cash bid of 222p per share to its shareholders, valuing the single-price retailer at £597m. The offer is a premium of 39pc on Poundland shares on June 13, before Steinhoff made its interest known.

Darren Shapland, Poundland chairman, said: “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.”

He added that the takeover would secure “earlier delivery” of “medium-term value” for Poundland shareholders than the retailer’s own turnaround plan. The company has reported falling profits after struggling to absorb the takeover of its smaller rival 99p Stores, which was complicated by a lengthy competition probe. Last month it reported an 84pc plunge in pre-tax profits to £5.9m in the year to March 27.

Markus Jooste, CEO of Steinhoff, said: “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 recognises the strength and value of the Poundland management team and anticipates that they will play a key role in the ongoing growth and development of Poundland as part of the Steinhoff group.”

It has been a rocky couple of years for Poundland, which floated at 300p a share in March 2014. Its £50m acquisition of 99p Stores in 2015 added 251 shops to its estate of 600 stores, but was delayed by a protracted probe by the Competition and Markets Authority. When Poundland finally sealed the deal, it found that suppliers had lost credit insurance and stock levels in the stores had collapsed.

The company’s long-standing boss Jim McCarthy retired earlier this year. His replacement is Kevin O’Byrne, a former executive at Kingfisher, who was due to take up the reins at the start of this month.