The owner of the Dealz discount stores is set to be bought in a huge €715 million deal
The chain has been struggling with fierce competition from other discounters.
DISCOUNT RETAILER POUNDLAND, which operates under the Dealz brand in Ireland, has agreed to a £597 million (€715 million) takeover deal by South African retailer Steinhoff International.
The UK-based company accepted an offer of 222p-a-share after rejecting an undisclosed offer last month. This is a premium of 39% on Poundland share price before Steinhoff made its interest known, but below the retailer’s float price of 300p in March 2014.
Although Poundland does not break down sales on a country-by-country basis the firm, which sells almost all its products at the single price point of €1.49 in Ireland, has about 50 stores here.
Steinhoff already bought 23% of Poundland and had a deadline of today to make a full cash offer for the company.
The bid marks around a 40% premium to the value of Poundland’s shares in mid-June, and the firm has recommended that shareholders accept the offer.
Tough trading
Poundland’s share price has slumped in the past year as it has struggled with fierce competition from other UK retailers and the integration of the 99p Stores brand, which it acquired in a £55 million deal last year.
Model Rosanna Davison outside a Dealz store in Blanchardstown
Last month the company reported a significant drop in earnings during its 2016 financial year. Although total sales in the UK and Ireland rose from £1.1 billion to £1.3 billion in the 12 months to 27 March 2016, on a like-for-like basis the numbers were down – while pre-tax profits dropped from £59.4 million to just under £6 million.
The company said that much of the fall was due to “difficult markets and falling high street footfall (and) disruption from the accelerated 99p Stores’ conversion programme”.
The company had said that it planned to open 20 to 30 net new stores during its 2017 financial year “primarily in the Republic of Ireland and in retail parks”.
Dealz had not responded to a request for comment at the time of publication.
No big staff changes
Steinhoff said that its plans for Poundland “do not involve any material change in the conditions of employment of Poundland’s employees”, and added that Steinhoff it does not intend to change Poundland’s “places of business”.
In March, Steinhoff lost out in a battle with Sainsbury’s to buy Argos owner Home Retail Group and missed out on acquiring French electronics seller Darty in April.
The South African firm owns UK furniture business Harveys and Bensons For Beds, as well as several other retailers across Europe, Australasia and Africa.
Christo Wiese, the billionaire that holds 17% of Steinhoff, also has stakes in fashion chain New Look and supermarket Iceland.
