That again set the scene for a spirited bid for a European retailer — Steinhoff’s third in six months and only two weeks after it gave up on France’s Darty.
The South African furniture conglomerate, in a race to expand offshore, is mulling an all-cash offer for Poundland.
On Wednesday, Steinhoff confirmed it was the secret buyer of a 15.3% stake sold by private equity group Warburg Pincus in Poundland, adding that it was keen on a takeover.
However, it said it was acting without the consent of Poundland, suggesting talks had been far from agreeable. "They are essentially making a hostile bid," said Wayne McCurrie of Momentum Asset Management.
"It does not look like (Poundland’s) management is supporting their bid so they are buying … in the open market," he said.
On Wednesday, Poundland’s management told shareholders not to take any action.
Steinhoff played a similar card in its pursuit of electronics retailer Darty, bagging up a 20.4% stake in a few weeks after months of pursuit against rival Fnac which eventually won over the Darty board.
In March Steinhoff also walked away from a face-off with UK retailer Sainsbury’s for Home Retail Group, owned by catalogue retailer Argos.
McCurrie said it showed maturity that Steinhoff did not overpay for the businesses, despite the muscle they stood to gain in the competitive retail space, which is being threatened by online shopping.
Steinhoff already has a strong presence in Europe where it generates almost 60% of its revenue. Its international brands include Conforama and UK-based Harveys, Bensons for Beds and Cargo.
A full buyout of Poundland would give Steinhoff 900 new discount stores across Britain, Ireland and Spain after Poundland bought the 99p chain.
Competing in the discount space would be familiar terrain for the group which bought Pepkor from now Steinhoff chairman Christo Wiese for R62.8bn in 2014.
On Thursday Poundland reported underlying pretax profit of £37.8m in the year to March from £43.7m in 2014-15.
Profits were hurt by poor Christmas trading and a spike in costs relating to its £55m acquisition of the store chain.
Outgoing Poundland CEO Jim McCarthy was mum on the Steinhoff interest.
The timing of Steinhoff’s potential bid was interesting, Chris Gilmour, analyst at Absa Wealth and Investments said.
It was less than two weeks before the Brexit vote on June 23, which will determine whether the UK will stay in the EU.
"This may make the consideration for Poundland a little bit cheaper," Gilmour said.
Steinhoff chairman Wiese understood the discount market well, he said, having previously owned Poundstretcher, a value retail chain.
Poundstretcher, however, struggled to keep up with larger rivals Poundland and B&M and Wiese sold it around 2009.
On Wednesday, Wiese told Reuters that he fully supported Steinhoff’s bid and that he believed Poundland would be a "good fit".
With Reuters
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