Willenhall-based Poundland agrees to £597 million takeover from South African firm

Black Country-based discount chain Poundland is to be snapped up by a South African firm after agreeing a £597 million takeover deal.

Poundland, which employs around 700 staff at its headquarters in Willenhall and a major distribution site in Bilston, will be taken over by Steinhoff International, which already owns UK furniture firms Harveys and Bensons For Beds.

Steinhoff said it had no plans to change the group's head office or employment conditions for its 18,000 staff across the country.

Steinhoff had already built up a 23.6 per cent stake in Poundland in recent weeks and had a cash offer for the company refused as it stepped up its pursuit of the set-price retailer.

Darren Shapland, chairman of Poundland, said the deal gives investors an "opportunity to realise their shareholding at a certain and attractive price".

He said it achieved the share price value targeted under its turnaround plan earlier than could be expected "against a background of increasing economic uncertainty in the UK and a more challenging trading environment".

Steinhoff chief executive Markus Jooste said: "The board of Steinhoff and its management team are enthusiastic about the opportunities that this transaction brings: we believe that there is significant merit in bringing Poundland into Steinhoff's global network.

"Steinhoff is developing a fast-growing, price-led retail business across the UK and the rest of Europe. Poundland would be a complementary fit to this growth story."

He added that management at Poundland would continue to play a "key role" after the takeover and said he looked forward to "welcoming" the chain's employees.

The deal comes after Steinhoff recently lost out in a battle with Sainsbury's to buy Argos owner Home Retail Group in March and was outbid for London-listed white goods retailer Darty.

And the sale price marks around a 40 per cent premium to the value of Poundland's shares in mid-June.

It follows a hefty slump in Poundland's shares over the past year after tough trading and a difficult takeover of rival 99p Stores.

Annual results recently laid bare Poundland's sales woes as underlying pre-tax profits fell 13.5 per cent to £37.8 million in the year to March 27, while bottom-line pre-tax profits crashed 83.7 per cent to £5.9 million, including converted 99p Stores.

The deal also marks an eventful start at the top for Poundland's new boss, Kevin O'Byrne, after he took the reins earlier this month.

The former B&Q UK and Ireland head took over from predecessor Jim McCarthy on July 1, having joined as chief executive-designate in April.

Retail analysts at Liberum said Steinhoff had offered a "knock-out price".

They added: "The recommended cash offer is a good result for Poundland shareholders and comes at a time when there was more downside risk than upside in our view."

Steinhoff has been determined to expand further across Europe, having tried and failed to gatecrash two deals in recent months.

It is backed by South African retail billionaire Christo Wiese, whose Brait investment group also owns controlling stakes in Virgin Active, New Look and food chain Iceland.

Steinhoff also owns Conforama in France, as well as a number of retailers across Europe, Australasia and Africa.