Paul Jarvis

Steinhoff weighs options after Poundland rejects approach

Steinhoff International Holdings NV said it’s considering its position after U.K. discount retailer  Poundland Group Plc rejected its takeover proposal, raising the possibility of another failed foray in Europe.

Steinhoff needs to consider factors including Britain’s decision to leave the European Union, the South African company said in a brief statement Friday. A day after the initial approach was disclosed on June 15, Poundland forecast a drop in first-half same-store sales. Its shares fell 10 percent in London Friday after the Brexit vote.

“It’s sensible for Steinhoff to reconsider their position,” said Mark Hodgson, an analyst at Avior Capital Markets. “I wouldn’t necessarily read that they are walking away. If Poundland’s share price falls further, it could work to their advantage.”

Should Steinhoff pull out, it will be the third time this year that it has tried and failed to buy a European retailer. In March, it ditched its pursuit of Britain’s Home Retail Group Plc, allowing J Sainsbury Plc to win the owner of the Argos general-merchandise chain. The following month it abandoned a bid for French electronics retailer Darty Plc after a protracted duel with Groupe Fnac SA.

“People don’t bank on big projects when there’s uncertainty,” said Jonathan Pritchard, an analyst at Peel Hunt. It’s too hard to call whether Steinhoff will come with a better offer as the Brexit vote has increased the risk of recession, he said.

Steinhoff bought 22.8 percent of Poundland’s stock for about 119 million pounds earlier this month ahead of a possible all-cash offer. The value of the stake has since declined to 114 million pounds.

Poundland traded at 183.5 pence as of 12:55 p.m. in London, valuing the retailer at 493.1 million pounds. Steinhoff dropped 6.3 percent to 5.07 euros in Frankfurt.

A further announcement “will be made in due course,” Steinhoff said Friday.

– Bloomberg