Steinhoff readies expected Poundland bid as deadline approaches

 
Helen Cahill
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Poundland's sales have been suffering due to its buy-out of 99p stores (Source: Getty)

South African retail giant Steinhoff is gearing up for an expected bid for Poundland this week, with the deadline for a possible £600m bid set for Wednesday.

The Bensons for Beds owner first announced in mid-June that it was considering a bid for Poundland "without the consent of Poundland". Poundland's shares jumped over seven per cent after the announcement, hitting 210.20p in early trading.

Read more: Steinhoff increases Poundland holding despite Brexit vote

The South African conglomerate is looking to increase its presence in the UK. It already has operations in Europe, Africa and Australasia.

Its first offer was rejected by Poundland, which Steinhoff blamed on a slowdown in Poundland sales; Poundland announced a drop in sales for its previous quarter, with pre-tax profits falling 83.7 per cent, from £36.2m last year to £5.9m for the year to 27 March.

Poundland's share price has been suffering since the referendum, and is now at around 180p. It was once thought Steinhoff would have to offer around 220p to 230p, but that may well have changed post-Brexit.

Read more: Poudland shares have jumped after a surprise takeover offer

David Stoddart, analyst at Edison Investment Research, said "Steinhoff will enjoy greater room for manoeuvre" due to the fall in sterling.

"We would not be surprised to see it return with a more attractive offer, the cost of which may be mitigated by currency moves," Stoddart said.

Steinhoff increased its holding in Poundland at the end of June, up from 23.26 per cent to 23.52 per cent.

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