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Steinhoff may need to increase offer for Poundland Steinhoff may need to increase offer for Poundland
(about 1 month later)
Steinhoff, the South African group, is expected to face pressure to increase its £597m offer for Poundland after rebel investor Elliott Advisors revealed it had taken control of a 13.2% stake.Steinhoff, the South African group, is expected to face pressure to increase its £597m offer for Poundland after rebel investor Elliott Advisors revealed it had taken control of a 13.2% stake.
On Wednesday, Poundland said it had agreed a takeover by Steinhoff, the South African retail conglomerate that owns Harveys and Bensons for Beds in the UK. The struggling discount retailer recommended the deal to shareholders, who will receive 220p a share, plus the 2p a share dividend announced in June for the year ending 27 March.On Wednesday, Poundland said it had agreed a takeover by Steinhoff, the South African retail conglomerate that owns Harveys and Bensons for Beds in the UK. The struggling discount retailer recommended the deal to shareholders, who will receive 220p a share, plus the 2p a share dividend announced in June for the year ending 27 March.
But a stock exchange announcement on Thursday revealed that Elliott Capital Advisors, the UK arm of US hedge fund Elliott Management now spoke for a 13.2% stake controlled via contracts for difference (CFD). A CFD is an agreement between two parties – the investor and the CFD provider – to pay each other the change in the price of an underlying asset, in this case Poundland shares.But a stock exchange announcement on Thursday revealed that Elliott Capital Advisors, the UK arm of US hedge fund Elliott Management now spoke for a 13.2% stake controlled via contracts for difference (CFD). A CFD is an agreement between two parties – the investor and the CFD provider – to pay each other the change in the price of an underlying asset, in this case Poundland shares.
The stake is not high enough to block the takeover deal in its current form but could nevertheless create a headache for the prospective buyers. Poundland shares closed up 3.75p at 224.5p.The stake is not high enough to block the takeover deal in its current form but could nevertheless create a headache for the prospective buyers. Poundland shares closed up 3.75p at 224.5p.
Related: Struggling Poundland agrees to £597m takeover by Steinhoff
Elliott has a history of agitating for change at companies and pushing for better terms in takeovers. A recent high profile target was Alliance Trust, one of the UK’s oldest investment firms, which eventually agreed to appoint two of the three independent directors it had nominated. Other examples include Quintain Estates and Development, the developer behind Wembley Arena, where Elliott also used CFDs to get US private equity group Lone Star to up its offer.Elliott has a history of agitating for change at companies and pushing for better terms in takeovers. A recent high profile target was Alliance Trust, one of the UK’s oldest investment firms, which eventually agreed to appoint two of the three independent directors it had nominated. Other examples include Quintain Estates and Development, the developer behind Wembley Arena, where Elliott also used CFDs to get US private equity group Lone Star to up its offer.
Darren Shapland, the chairman of Poundland, said on Wednesday that the takeover would allow the retailer to achieve its turnaround ambitions sooner than expected “against a background of increasing economic uncertainty in the UK and a more challenging trading environment”.Darren Shapland, the chairman of Poundland, said on Wednesday that the takeover would allow the retailer to achieve its turnaround ambitions sooner than expected “against a background of increasing economic uncertainty in the UK and a more challenging trading environment”.
The retailer has only been listed for two years, floating at 300p a share in March 2014. But its shares have plunged in value over the past year due to poor trading, competition from discounters such as Aldi and Lidl and its £55m takeover of 99p Stores, which was delayed by a competition inquiry.The retailer has only been listed for two years, floating at 300p a share in March 2014. But its shares have plunged in value over the past year due to poor trading, competition from discounters such as Aldi and Lidl and its £55m takeover of 99p Stores, which was delayed by a competition inquiry.
During the six-month investigation by the regulator, 99p Stores lost its credit insurance, which meant the retailer was cut off by many suppliers, leaving it with empty shelves and resulting i the departure of 1,000 staff.During the six-month investigation by the regulator, 99p Stores lost its credit insurance, which meant the retailer was cut off by many suppliers, leaving it with empty shelves and resulting i the departure of 1,000 staff.
A spokesman for Steinhoff said there was no change to the terms of the deal set out on Wednesday. A spokeswoman for Elliott declined to comment.A spokesman for Steinhoff said there was no change to the terms of the deal set out on Wednesday. A spokeswoman for Elliott declined to comment.