Steinhoff is back shopping for a European retailer once more after it announced it was mulling a takeover bid for under-pressure Poundland.
News a mystery buyer had snapped up a 15% stake in the discounter, buying more than 40 million shares from Warburg Pincus at 195p each - way above the 155p price at the time - sent the shares soaring 23.7% to 195.8p by close of play on Tuesday. That was still well below its 300p March 2014 float price but is the highest it has been since early January. Shares were pushed 2.2% higher to 200p on Wednesday ahead of the annual results on Thursday morning, after the South African retail giant Steinhoff, owned by billionaire Christo Wiese, unmasked itself as the buyer of the stake and indicated a cash offer could soon follow.
Poundland advised shareholders to sit tight, but analysts suggested the UK retailer was very much in play after its share price collapsed from more than 400p in March last year. “It is possible there could be other bidders given the current valuations and given the performance of the business over the past year, and with CEO Jim McCarthy retiring, the board might find it hard not to recommend accepting a bid notably above this price,” Credit Suisse said.
Even a 84% slump in profits last year caused by problems related to the acquisition of 99p Stores failed to dent investor confidence, with shares up another 5% to 210p at time of writing as Steinhoff revealed it had built its stake to 23%.
Meanwhile, shares in Ocado sunk to lows not seen since early 2013 on Tuesday morning as the threat of Amazon Fresh caused a mass sell-off. The share price hit a low of 203p before stabilising to 223.3p by Wednesday - it was as high as 600p in February 2014. The slump was triggered by the news of Amazon rolling out Fresh in Central and East London. Jefferies noted sales within the M25 made up at least 35% of Ocado’s business, making it “most vulnerable to share shift”. HSBC was more relaxed: “If Amazon is 50% of the size of Ocado in five years it will have done well, but would still be well under 0.5% market share.”