Discounter Poundland – which has 900 stores in the UK, Ireland and Spain – has been snapped up by South African retailer Steinhoff International after agreeing a £597m takeover deal.
The deal comes after Steinhoff -which owns furniture firms Harveys and Bensons For Beds – lost out in a battle with Sainsbury’s to buy Argos owner Home Retail Group in March; and was outbid for London-listed white goods retailer Darty.
The sale price, which also includes a 2p-a-share final dividend on top of the 220p-a-share bid, marks around a 40% premium to the value of Poundland’s shares in mid-June.
Poundland has – in contrast to other discounters – been struggling of late. Its shares over the past year after tough trading and a troubled takeover of rival 99p Stores.
Annual results recently laid bare Poundland’s sales woes as underlying pre-tax profits fell 13.5% to £37.8m in the year to March 27, while bottom-line pre-tax profits crashed 83.7% to £5.9m, including converted 99p Stores.
Steinhoff had already built up a 23.6% stake in Poundland in recent weeks as it stepped up its pursuit of the set-price retailer.
Darren Shapland, chairman of Poundland, said the deal gave investors an “opportunity to realise their shareholding at a certain and attractive price”.
He said it achieved the share price value targeted under its turnaround plan earlier than could be expected “against a background of increasing economic uncertainty in the UK and a more challenging trading environment”.
It is thought – for the moment at least – the Poundland brand will remain.