POUNDLAND AGREES NEW OFFER FROM THE IKEA OF AFRICA
Discount chain Poundland has agreed to an improved takeover offer from South African retail group Steinhoff described as the IKEA of Africa.
The new bid values Poundland at about £610m, compared with a £597m offer that had been agreed between the two firms last month.
There had been speculation that Steinhoff would have to up its offer after US hedge fund Elliot increased its stake in Poundland.
Steinhoff said that the new offer was final. Poundland operates more than 900 stores across the UK, Ireland and Spain, and employs 18,000 people.
Steinhoff owns 40 retail brands in 30 countries, including Bensons for Beds and Harveys in the UK.
Elliot currently holds a 17.5% stake in Poundland. It has played a part in extracting higher prices from bidders before, being one of the activist investors that managed to get AB InBev to improve its offer for SABMiller last month.
Under the revised offer, Poundland shareholders will receive 227p in cash per share, consisting of Steinhoff’s 225p-per-share offer and a final dividend of 2p per share. Under the previous offer Steinhoff had offered 220p per share plus the 2p dividend.
Independent retail analyst Nick Bubb described the increase as “a pretty modest victory for shareholder activism”.
Steinhoff chief executive Markus Jooste said the improved cash offer aimed to “bring certainty to the transaction”.
The new offer represents a 43.4% premium to Poundland’s share price before Steinhoff announced its interest in the group in June.
Mr Jooste said both the boards of Steinhoff and Poundland considered the offer “to be at a highly attractive premium to the Poundland undisturbed share price”.
“We believe there is significant merit to both Poundland and Steinhoff in bringing Poundland into our global operations, and the Steinhoff directors and management are enthusiastic about the related opportunities that will arise.”
Steinhoff has been trying to increase its exposure in Europe. Its pursuit of Poundland comes after an unsuccessful attempt to buy Argos owner Home Retail Group, when Sainsbury’s ended up as the successful bidder.
Steinhoff also failed in an attempt to buy French electronic goods retailer Darty when it lost out to French retail chain Fnac.