The board of Poundland (PLND) has agreed to a 222p per share sale to South African retail group Steinhoff, valuing the business at £597m.

Poundland announced it has accepted Steinhoff’s cash offer this morning ahead of today’s “put up or shut up” deadline after Steinhoff first approached Poundland over a bid on 15 June.

The 222p per share offer represents a premium of 40.3% to Poundland’s closing price of 158.25p on 13 June and 13.3% to yesterday’s closing price of 196p.

The recommended offer will now be put to shareholders, with the agreement of 75% of shareholders (by value) needed to approve the deal.

Darren Shapland, chairman of Poundland, said: “The Poundland Board believes that SEAG’s all-cash offer presents Poundland shareholders with an opportunity to realise their shareholding at a certain and attractive price, securing earlier delivery of the Poundland Group’s medium term value than could be expected from the ongoing turnaround process against a background of increasing economic uncertainty in the UK and a more challenging trading environment.

“The single-price sector has undergone significant modernisation and professionalisation in recent years and is now a mainstream feature of UK retail. Through the hard work and dedication of our many thousands of talented colleagues, Poundland has played a pivotal role in that transformation.

“Steinhoff is a well-capitalised, international business with a clear and proven commitment to value retailing. They share our vision for the growth and expansion of Poundland and, as such, we believe they are a suitable and appropriate partner for our colleagues, our suppliers and stakeholders.”

Markus Jooste, CEO of Steinhoff, added: “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.

“Steinhoff recognises the strength and value of the Poundland management team and anticipates that they will play a key role in the ongoing growth and development of Poundland as part of the Steinhoff group. We look forward to welcoming Poundland employees to be part of one of Europe’s leading multi-format discount retailers.”

Explaining the reasons for accepting the offer, Poundland said the acquisition of 99p Stores had “placed a significant strain on the core business”

The offer document states: “The acquisition of 99p Stores strengthened Poundland’s position as Europe’s biggest single-price discounter and positions it well for the long term, but also placed significant strain on the core business.

“The conversion of 99p Stores to the Poundland fascia was completed ahead of schedule, but was more capital intensive and needed more attention from management than expected. Also, as Poundland has reported over the past year, the impact of increased competition, falling high street footfall, and changing consumer shopping behaviour have impacted performance.”

Poundland shares floated at 300p per share in March 2014 and were trading at over 400p in March 2015 before its trading momentum tailed off following the 99p Stores acquisition in February 2015.

Morning update

Raisio Group has sold its UK snack bar business Halo Foods to Dutch investor investor Nimbus, taking  a €19m on the divestment. 

Raisio said an agreement signed on 12 July and Halo Foods’ business and employees in the UK have now been transferred to the new owner.

CEO Matti Rihko said that Raisio will withdraw from manufacturing of snack bars marketed to consumers under its partners’ brands and focus on the development and marketing of proprietary branded products.

“For Raisio, it is important to expand the range of its branded products in line with consumer needs, not to produce itself all the products in the range,” he said.

Own label snacks producer Halo Foods employs around 300 people in factories Newport and Swindon and also owns the Dormen brand.

Raisio said it will record a loss of approximately €19m for the divestment of Halo Foods business and approximately €1m as restructuring costs related to the UK Snack & Cereal business in the second quarter,

Halo Foods became part of Raisio through its acquisition of Glisten in 2010. Halo Foods generated turnover of €18m in period January - June 2016.

Raisio said Nimbus is a “hands-on investor with significant experience in acquisitions in the food sector in Europe”.

The FTSE 100 has remained stable again today ahead of the transfer of power at Downing Street, falling just 0.2% to 6,668.8pts.

Understandably, Poundland (PLND) has leapt 12.4% to 220.5p this morning after the announcement of its 222p per share takeover by Steinhoff.

Elsewhere, Applegreen (APGN) is up 3.8% to 345p, Real Good Food (RGD) is up 2.7% to 32.9p and Premier Foods (PFD) is up 2.5% to 46.4p.

Ocado (OCDO) has eased back 1.9% to 249.7p following its bumper rise yesterday and most other major stocks are slightly in the red. Big consumer goods exporters continue to deflate as the pound has rallied back to $1.33 from under $1.30 earlier this week.

Associated British Foods (ABF) is down 1.2% to 2,785p this morning, while Diageo is down 1.3% to 2,106.5p.

Yesterday in the City

Despite the current political upheaval and continued economic uncertainty triggered by Brexit, the FTSE 100 barely moved yesterday, dropping just 2pts to 6,680.7pts.

There were some significant market movers though, notably Ocado (OCDO) which leapt 7.4% to 254.5p after announcing a tie-up with Marie Claire to launch an online beauty brand called Fabled.

Ocado hit a three-year share price low of 203p in mid-June, having slid from 478.5p in July last year.

Other risers included Book Group (BOK), up 2.7% to 169.5p, Tesco (TSCO), up 2.7% to 169.7p, PayPoint (PAY), up 2.6% to 935p and Premier Foods (PFD) up 2.3% to 45.3p.

PureCircle (PURE) dropped 4.1% to 343p yesterday after the announcement of the resignation of its COO.

A number of UK-based multi-national fmcg giants were down as well yesterday as the gradual strengthening of the pound took the wind out of their recent currency-related share price rises.

Reckitt Benckiser (RB) was down 2.2% at 7,525, Unilever (ULVR) down 1.9% to 3,586p, British American Tobacco (BAT), down 1.6% to 4,839.5p and Diageo (DGE) down 1.3% to 2,124p.