South Africa’s Steinhoff continues push for Europe as it considers bid for Poundland

Less than two months after losing out in a bid to buy French electronics retailer Darty Plc, South Africa’s Steinhoff International Holdings NV said it is considering a bid for British discount chain Poundland, as it continues its attempt to push deeper into Europe.

The company said on Wednesday that by July 13 it must announce a firm intention to bid for Poundland, a company valued at $800 million, selling all items at a single price point of 1 pound in its stores in Britain.

Steinhoff had last year switched its primary listing to Frankfurt, a move reflecting Europe’s increasing importance to the company. After a period of expansion, the company now gets more than half its sales in Europe, where it has operations in the U.K., France and Germany. In a bid to further expand in the region, the company which sells furniture to lower income shoppers in Europe would be hoping pressure on consumer income further grows margins.

Adding Poundland to its portfolio — which boasts names like white goods retailer Conforama in France and furniture chain Harveys in Britain — would give Steinhoff a company with more than 900 shops in Britain, Ireland and Spain.

However, Steinhoff will be facing the challenge of stabilizing Poundland whose 1 billion annual sales have been under pressure. Good thing is that “Steinhoff has a proven track record of integrating businesses and improving their margins over time.”

Nothing is certain yet as Steinhoff is yet to make an official bid. Poundland had also told its shareholders to take no action for now, as there was no certainty than an offer would be made.

Steinhoff has switched its headquarters to Amsterdam from Johannesburg, and its main focus is to expand its brands into territories adjacent to its existing operations, particularly eastern Europe.

 

*** Steinhoff on Wednesday acquired 22.78 percent of Poundland and is considering a full cash bid for the British retail chain.