Poundland takeover by south African mega retailer.
Poundland, under ownership of Dealz brand in Ireland, has submitted to a £597 million (€715 million) takeover deal by South African retailer Steinhoff International.
The company agreed to an offer of 222p-a-share after previously refusing an offer last month. This is a premium of 39% on the Poundland share price before Steinhoff made its interest known, but below the retailer’s float price of 300p in March 2014.
Although Poundland does not illustrate sales on a “country-by-country” basis the successful company , which sells almost all its products at the single price point of €1.49 in Ireland, has at least 50 stores in the UK.
Steinhoff had previously bought 23% of Poundland and had a deadline of yesterday to make a full cash offer for the organisation.
The bid marks around a 40% premium to the value of Poundland’s shares in mid-June, and the firm has recommended that shareholders accept the offer.
High Finance?
Poundland’s share price has gone down recently. There has been stiff competition from other UK retailers and the introduction of the 99p Stores brand, which it “acquired” in a £55 million contract in 2015. So is it “fighting with itself?”
In June, the company reported a significant drop in revenue during the 2016 financial year. Although total sales in the UK and Ireland rose from £1.1 billion to £1.3 billion in the 12 months to 27 March 2016, on a like-for-like basis the numbers were down – while pre-tax profits dropped from £59.4 million to under £6 million.
The company observed much of the “fall” was due to “difficult markets and falling high street footfall (and) disruption from the accelerated 99p Stores’ conversion programme”. If they also owned that company – what essentially was the problem?
The company had stated that it was forecast to open 20 to 30 new shops during its 2017 financial year “primarily in the Republic of Ireland and in retail parks”.
Dealz had not responded to a request for comment at the time this article is being published.
Few or no staff alterations.
Steinhoff stated that its plans for Poundland “do not involve any material change in the conditions of employment of Poundland’s employees”, and additionally Steinhoff has no intention to change Poundland’s “places of business”.
Steinhoff is a feisty and active company and in March, lost out in a battle with Sainsbury’s to buy Argos owner Home Retail Group and missed out on acquiring French electronics seller Darty in April.
The South African company is the proprietor of UK furniture business Harveys and Bensons For Beds, as well as quite a number of other retailers across Europe, Australasia and Africa.
Christo Wiese, the billionaire who holds 17% of Steinhoff, also has stakes in fashion chains New Look and supermarket Iceland. All the companies “they” deal with seem to belong to the bargain end of chain stores.
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