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Steinhoff’s £600m takeover bid for Poundland (PLND) has been complicated by an activist hedge fund building up a sizable stake in the beleaguered fixed-priced discounter.

Elliott Capital Advisors, the UK arm of the US fund, revealed in documents posted on the London Stock Exchange yesterday afternoon that it now controls 13.2% of the retailer.

It has taken control of the stake through complicated derivatives contracts, buying up shares just above the 220p (plus 2p dividend) offered by Steinhoff.

The stake is not high enough to block the potential deal but as one of Poundland’s biggest shareholders it could increase the pressure on the South African retail giant to up its offer.

It is another headache for Steinhoff as it tries for the third time to complete a deal after failing in its attempts for Home Retail Group and Darty earlier this year.

Poundland has already recommended its shareholders accept the 220p offer from Steinhoff.

Shares in Poundland jumped 1.6% yesterday to trade at a premium to the 220p Steinhoff offer at 224p.

Morning update

Poundland continued to climb this morning, up another 0.5% to 225.6p in expectation that Steinhoff may need to increase its offer to seal the deal.

The FTSE 100 dropped more than 30 points when the markets opened before recovering to just 0.1% down at 6,651.71 points as confidence is shaken by the fresh terror attacks in France overnight.

B&M Bargains is up another 0.4% so far to 271.3p. Other climbers included Greggs (GRG), up 0.4% to 979.5p, and Reckitt Benckiser, up 0.2% to 7,440p.

Ocado has slipped 2.7% to 252.2p, Tesco (TSCO) is down 1% to 166.7p and Sainsbury’s is down 0.9% to 229.3p

Yesterday in the City

McColl’s Retail Group finished the day 17% higher at 160p – it had been as high as 23% up – after it announced the purchase of 298 smaller food stores from The Co-op for £117m shortly after markets closed on Wednesday. Shares in the group had slumped from 172p in May to lows of 126p, but investors piled back into the stock as it showed its strategy to turn away from newsagents to focus on convenience had substance.

B&M European Value Retail (BME) also had a good day with shares climbing 5.5% after the discounter reported a 21% increase in first quarter sales to £554.8m thanks to its ever-increasing store base.

Other stocks in the black included Ocado (OCDO), up 1.6% to 258.4p, Greencore (GNC), up 1.1% to 310.7p, and Sainsbury’s (SBRY), up 0.7% to 231.8p.

The FTSE 100 ended the day 0.2% down to 6,654.47 points, losing gains made in morning trading, following the Bank of England’s decision to leave interest rates unchanged. However, the pound lifted against the dollar and euro as a result – up more than 2% on the day.

Marks & Spencer (MKS), Reckitt Benckiser (RB), Unilever (ULVR) and Diageo (DGE) were among the day’s fallers, down 2% to 331.5p, 1.6% to 7,431p, 1.2% to 3,558.5p and 1.1% to 2,101p.

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