Cape Town – Steinhoff has agreed to buy UK discount store Poundland for £597m (R11.4bn), the South African-bred business announced on Wednesday.
Steinhoff offered 222 pence a share in cash for 76% of the stock it doesn't currently own, Poundland said in a statement. "The offer represents a 13 per cent premium to Poundland’s closing price of 195p a share on Tuesday," the Financial Times explained.
Steinhoff had already bought 23.6% of the other shares ahead of the deal.
"Buying Poundland marks Steinhoff’s first success in European dealmaking this year, after failing to acquire French retailer Darty and Argos owner Home Retail Group, the FT reported.
“The Poundland directors intend to recommend unanimously that Poundland shareholders vote in favour of the scheme at the court meeting and the resolutions to be proposed at the general meeting as the Poundland directors who hold Poundland shares have irrevocably undertaken to do …,” it said.
"The board of Steinhoff and its management team are enthusiastic about the opportunities that this transaction brings,” said Steinhoff CEO Markus Jooste. “We believe that there is significant merit in bringing Poundland into Steinhoff's global network.
“Steinhoff is developing a fast-growing, price-led retail business across the UK and the rest of Europe. Poundland would be a complementary fit to this growth story.
“Steinhoff recognises the strength and value of the Poundland management team and anticipates that they will play a key role in the ongoing growth and development of Poundland as part of the Steinhoff group.
“We look forward to welcoming Poundland employees to be part of one of Europe's leading multi-format discount retailers."
South African billionaire Christo Wiese is Steinhoff’s largest shareholder. His UK focus has seen him buy shares in Virgin Active and New Look through another company, Brait.
Poundland chairperson Darren Shapland said: the Poundland board believes that SEAG's all-cash offer presents Poundland shareholders with an opportunity to realise their shareholding at a certain and attractive price.
“The single-price sector has undergone significant modernisation and professionalisation in recent years and is now a mainstream feature of UK retail,” he said. “Through the hard work and dedication of our many thousands of talented colleagues, Poundland has played a pivotal role in that transformation.
“Steinhoff is a well-capitalised, international business with a clear and proven commitment to value retailing. They share our vision for the growth and expansion of Poundland and, as such, we believe they are a suitable and appropriate partner for our colleagues, our suppliers and stakeholders."
Steinhoff is developing a fast-growing, price-led retail business across the UK and the rest of Europe. This agreement is its third attempt to expand in Europe this year.
Steinhoff believes the Poundland business will be an attractive addition to its existing multi-format discount retail business, and accelerate the group's customer proposition and growth dynamics.