Steinhoff Raises Poundland Bid After Activist Stake-Building

  • Elliott Capital had accumulated 17.5% stake in Poundland
  • New offer gives activists return on their investment: analyst

Steinhoff International Holdings NV raised its agreed bid for U.K. discount chain Poundland Group Plc after activist Elliott Capital built a stake that threatened to derail the deal.

The South African suitor boosted the offer by 5 pence a share to 227 pence a share, it said in a statement Thursday. That values Poundland at 610 million pounds ($793 million), an increase of about 13 million pounds on the original bid.

The new offer comes after New York-based Elliott accumulated a 17.5 percent stake in Poundland last month through derivative contracts. That posed a potential difficulty for Steinhoff, as its original bid required 75 percent of Poundland’s shareholders to approve the transaction. This is the second British takeover this year where Elliott has intervened, after it was among the firms that asked SABMiller’s board to reconsider the terms of Anheuser-Busch InBev’s takeover.

The incremental cost of raising the bid “is immaterial in the context of Steinhoff, but offers activist shareholders a return on their investment,” Graham Renwick, an analyst at Exane BNP Paribas, said in a note. Under Steinhoff’s revised offer, the bid could proceed in a form that requires support from a simple majority of shareholders.

Poundland shares fell 1.2 percent to 221.25 pence at 8:16 a.m. in London. Steinhoff eased 0.2 percent to 5.92 euros in Frankfurt.

Steinhoff, whose 2,300 stores sell a range of items from furniture to discount apparel, will need to revive growth at Poundland, which just embarked on a turnaround plan under new Chief Executive Officer Kevin O’Byrne. The South African company this week extended a European acquisition spree to the U.S., agreeing to buy Mattress Firm Holding Corp. for about $2.4 billion.

The 227 pence offer includes Poundland’s 2 pence full-year dividend. The target company was advised by JPMorgan Cazenove and Rothschild, while Investec acted for Steinhoff.

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