Steinhoff buys Poundland in R11bn deal

Steinhoff has agreed to buy out UK discount chain Poundland for R11 billion, Bloomberg reports.

Johannesburg - Steinhoff has agreed to buy out UK discount chain Poundland for R11 billion, Bloomberg reports.

The wire service says the deal - the equivalent of $794 million) - marks Steinhoff’s third attempt this year to expand its European retailing business.

Steinhoff offered 222 pence a share in cash, Poundland said in a statement on Wednesday, Bloomberg reports. That’s about 40 percent more than the closing price June 13, before the shares surged on bid speculation.

Steinhoff International Holdings acquired almost a quarter of Poundland Group’s shares last month as the South African company stages its latest attempt to buy a European retailer after twice being denied in recent months.

Steinhoff International, based in SA, operates in Europe, Africa and Australasia through several furniture and other retail outlets. It was founded in 1964 by Bruno Steinhoff in Westerstede and moved to SA about two decades later. In the UK, it owns Cargo, Harveys Furniture, Bensons for Beds and Sleepmaster, while in Europe it owns Conforama, the continent’s second-largest retailer of home furnishings.

Read also: Poundland stake good for Steinhoff’s profile

Steinhoff, led by CEO Markus Jooste and billionaire Christo Wiese, had been foiled in attempts to buy two other European retailers this year.

In March, it dropped its pursuit of Britain’s Home Retail Group, allowing J Sainsbury to buy the owner of the Argos general-merchandise chain. The following month it abandoned a bid for French electronics retailer Darty after a protracted duel with Groupe Fnac.

It wants to expand in Europe and challenge companies like Sweden’s Ikea after moving its primary share listing to Frankfurt from Johannesburg in December

For Poundland, the offer comes at a time when business is on a downward curve.

Its sales have been hurt by a surge in online shopping and a price war among the UK’s largest supermarket chains, while 2015’s purchase of rival 99p Stores chain also caused disruption. British retail industry veteran Kevin O’Byrne was named chief executive officer in March, and took the reins July 1.

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