South African retailer Steinhoff is actualising its European dream after agreeing to pay nearly $800 million for British-based discount chain Poundland. Steinhoff has failed twice in previous attempts to expand in Europe following its primary listing in Frankfurt last December.
Poundland had earlier rejected Steinhoff’s takeover proposal after the South African company bought 22.8 percent of Poundland’s stock for about 119 million pounds in June with the hope of a full takeover. However, Steinhoff had to consider its position after Poundland’s rejection, taking into account factors such as Britain’s decision to leave the European Union. But the deal looks good to Steinhoff and would give it a company with more than 900 shops in Britain, Ireland and Spain.
Steinhoff has a reputation for buying companies that are not doing too well but can benefit from its wide global network to source goods at lower prices. It will pay 220 pence per share plus 2 pence in dividends, valuing the Poundland at 597 million pounds ($791 million).
Poundland’s shares surged 12.24 percent in London on Wednesday, closing at 220 pence.