Poundland has agreed to a £597m takeover by Steinhoff, the South African retail conglomerate that owns Harveys and Bensons for Beds in the UK.



The struggling discount retailer recommended the deal to shareholders, who will receive 220p a share, plus the 2p a share dividend announced in June for the year ending 27 March. It values the company at £597m, Poundland said.

Steinhoff first emerged as a potential buyer on 15 June and had a deadline of 5pm on Wednesday to announce a firm intention to make a bid or walk away.

The group had been building up a stake in the UK chain and owned 23.6% of Poundland on 12 July, the day before the offer was confirmed.

Darren Shapland, the chairman of Poundland, said the takeover would allow the retailer to achieve its turnaround ambitions sooner than expected “against a background of increasing economic uncertainty in the UK and a more challenging trading environment”.

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

“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.”

The deal is the latest move 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 fashion chain New Look and supermarket Iceland, as well as an investment in Virgin Active gyms via his Brait investment vehicle.

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 French retailer Darty.

Commenting on the Poundland deal, Steinhoff’s chief executive, Markus Jooste, said: “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.

“We look forward to welcoming Poundland employees to be part of one of Europe’s leading multi-format discount retailers.”

The offer from Steinhoff 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.



Poundland is also struggling 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 longstanding chief executive, Jim McCarthy, stepped down in April to be replaced by the former B&Q chief 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 outlets in the UK and Ireland.

The Steinhoff offer represents a 40% premium to the closing share price of 158.25p on 13 June, the day before it started building a stake, and a 13% rise on the 196p closing price on 12 July.

Analysts at Liberum said it was a good deal for Poundland shareholders at a time “when there was more downside risk than upside”.

Greg Bromley, a senior analyst at Verdict Retail, said Steinhoff had made “a smart strategic move, although it will face considerable challenges in making it a real success”.

“While Steinhoff signalled its intention to buy Poundland before the Brexit vote was cast, its acquisition now looks like an even savvier move. Discount retailers have continued to thrive in the UK over the past few years, and any downturn in consumer confidence off the back of Brexit is only likely to further play into their hands,” he said.

