UK discount retailer Poundland has agreed to a £597m takeover by South African retailer Steinhoff International.
Steinhoff is paying 222 pence per share for the discount retailer, after making an informal approach for the retailer last month, which was rejected.
Buying Poundland will mark Steinhoff’s first acquisition success story in European deal making this year. It tried and failed to buy French retailer Darty and Argos owner Home Retail Group.
Poundland has more than 750 shops in the UK, Ireland and Spain. In September 2015, it took over rival value retailer 99p Stores, but has since suffered a slowdown in sales.
Poundland’s share price fell from 418p in February 2015 to below 200p, with pre-tax profits also falling sharply.
Darren Shapland, chairman of Poundland, 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, securing earlier delivery of the Poundland group’s medium-term value than could be expected from the ongoing turnaround process against a background of increasing economic uncertainty in the UK and a more challenging trading environment.”
Markus Jooste, chief executive of Steinhoff, 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.”