Poundland snapped up by Steinhoff for £597m

An agreement has been reached to take over Poundland for £ 597m by South African retail group Steinhoff International.

Poundland operates more than 900 stores across the UK, Ireland and plans in the UK and Spain and employs 18, 000 people, but recently announced declining profits. Steinhoff  founded in 1964 by Bruno Steinhoff, in Germany who bought South African furniture company Gommagomma in 1997, a major milestone for the business as it saw the arrival of Markus Jooste who continues to run the company and has been credited  turning it into the global giant today, also owns 6,500 retail outlets, 22 manufacturing facilities, 40 retail brands in 30 countries including Benson for Beds and Harveys in UK.

Steinhoff has already built up a 23 % stake in Poundland, and last month made an informal approach to buy them which was rejected.

Poundland  reported a fall in full-year profits as it admitted the integration of the 99p Stores which it bought in September 2015, and this had a definite strain on its business. Steinhoff is paying 222 pence per share for Poundland as the discount retailer’s share price had fallen from 418p in February 2015 below 200p before the deal was announced.

Poundland Chairman Darren Shapland said, “ The Poundland board believes that Steinhoff’s all cash offer presents Poundland shareholders with an opportunity to realise their shareholding at a certain and attractive price”.

Shares in Poundland, based in Willenhall in West Midlands, climber to 12% to 220p on Tuesday following news of the deal. The weak pound makes this all the more attractive for the South African retailer.

Steinhoff has been trying to increase its exposure in Europe this year after an unsuccessful attempt to French electronic goods retailer Darty and  £1.4bn offer for UK’s Argos owner Home Retail Group when Sainsbury’s ended up as the successful bidder

Steinhoff has Christo Wiese as their largest investor, who is popular in UK with takeovers of New Look and Virgin Active last year through his investment vehicle Brait, following takeover of Pepkor in 2014.