Discount chain sold
South Africans in £597m swoop on Poundland
Poundland’s board is recommending the offer, worth 222p a share, after rejecting an informal approach from Steinhoff last month.
Steinhoff had built a 23% stake in the chain, since when the pound has fallen around 15% against the South African rand, making a deal more attractive.
Even so, the offer price is higher than analysts expected. The agreed deal represents a 40.3% premium to the closing price of 158.25p on 13 June when Steinhoff bought shares in Poundland, and 13.3% above the 196p closing price last night.
Poundland is the largest single-price value general merchandise retailer in Europe by both sales and by number of stores. It has more than 900 stores across the UK, Republic of Ireland, and Spain.
Poundland is a price-driven, volume-led business offering an extensive range of products across 17 categories, with the average Poundland store carrying approximately 3,500 core range SKUs, including over 1,000 branded products, including Cadbury, Mars, Heinz, Nestle, Colgate, Coca Cola, Walkers and McVities, and a number of own branded products, including Jane Asher’s Kitchen, Make-up Gallery cosmetics and Purple Ivy Jewellery.
Poundland operates from headquarters in Willenhall, West Midlands, and employed on average 18,000 colleagues in the financial year ended 27 March. Poundland distribution capacity was enhanced in June with a new purpose built 350,000 sq. ft. distribution centre at Wigan.
In the financial year ended 27 March 2016, it generated revenue of £1.3 billion and Underlying EBITDA of £56.9 million with an Underlying comparable EBITDA margin of 4.6%.
Darren Shapland, chairman, 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.
“The single-price sector has undergone significant modernisation and professionalisation in recent years and is now a mainstream feature of UK retail. 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.”
Markus Jooste, CEO 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.
“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.”
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