Sunday 25 September 2016

Dealz owner Poundland sold for €717m

Published 13/07/2016 | 07:49

Jim McCarthy celebrates Dealz’s third anniversary of trading in Ireland.
Jim McCarthy celebrates Dealz’s third anniversary of trading in Ireland.

Discount chain Poundland, which operates in Ireland as Dealz, is to be snapped up by South African retailer Steinhoff International after agreeing a £597m (€717m) takeover deal.

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Poundland accepted the 222p-a-share bid after rejecting a cash offer from Steinhoff last month for an undisclosed sum.

The deal comes after Steinhoff - which owns UK furniture firm Harveys and Bensons For Beds - recently lost out in a battle with Sainsbury's to buy Argos owner Home Retail Group in March and was outbid for London-listed white goods retailer Darty.

The sale price, which also includes a 2p-a-share final dividend on top of the 220p-a-share bid, marks around a 40pc premium to the value of Poundland's shares in mid-June.

It follows a hefty slump in Poundland's shares over the past year after tough trading and a difficult takeover of rival 99p Stores.

Annual results recently laid bare Poundland's sales woes as underlying pre-tax profits fell 13.5pc to £37.8m in the year to March 27, while bottom-line pre-tax profits crashed 83.7pc to £5.9m, including converted 99p Stores.

Steinhoff had already built up a 23.6pc stake in Poundland in recent weeks as it stepped up its pursuit of the set-price retailer.

Darren Shapland, chairman of Poundland, said the deal gives investors an "opportunity to realise their shareholding at a certain and attractive price".

He said it achieved the share price value targeted under its turnaround plan earlier than could be expected "against a background of increasing economic uncertainty in the UK and a more challenging trading environment".

Steinhoff chief executive Markus Jooste said: "The board of Steinhoff and its management team are enthusiastic about the opportunities that this transaction brings: 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."

He added that management at Poundland would continue to play a "key role" after the takeover and said he looked forward to "welcoming" the chain's employees.

Press Association

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