Steinhoff confirms its interest in Poundland

Speculation over a potential bid for the business has been mounting
Speculation over a potential bid for the business has been mounting

Discount retail chain Poundland is in the takeover sights of South African retailer Steinhoff after the group confirmed it was considering making a bid.

Shares in Poundland surged 7% higher on the bid interest from Steinhoff.

It marks the latest takeover move by Steinhoff, after it lost out in a battle with Sainsbury’s to buy Argos owner Home Retail Group in March.

Steinhoff - which owns UK furniture firm Harveys - gave little detail on its interest in Poundland, saying only that it will make a further announcement “in due course”.

It has until 5pm on July 13 to make a firm bid or walk away under City takeover rules.

Poundland said shareholders are “strongly advised to take no action”.

Speculation over a potential bid for Poundland had been mounting ahead of the Steinhoff announcement after a stake of around 15% of the group was sold at a 24% premium to the stock price on Tuesday.

While the buyer was not confirmed, the move duly sent shares surging 24% higher.

It comes before Poundland’s results on Thursday, when outgoing boss Jim McCarthy will unveil his final set of full-year figures.

The chain has had a testing year following sales falls and a difficult takeover of rival 99p Stores.

The group is expected to report an 11% drop in underlying pre-tax profits to £38.7 million for the year to March 27 after seeing sales declines pick up pace in the final six months.

Like-for-like sales decreased by 3.9% over the full year, but the fall was steeper in the second half, at 4.9%.

A potential bid from Steinhoff gives new Poundland boss Kevin O’Byrne an eventful start to his tenure at the top.

The former B&Q UK and Ireland boss takes over from Mr McCarthy on July 1, having joined as chief executive designate in April.