Poundland rejects takeover bid by Harveys owner Steinhoff

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Discount retailer Poundland has rebuffed a takeover approach from suitor Steinhoff, dealing another blow to the South African retail giant.

Steinhoff - which owns UK furniture firm Harveys and Bensons For Beds - revealed Poundland had rejected a proposed cash offer for an undisclosed sum and said it was now "considering its position".

Shares in Poundland tumbled as much as 16% at one stage after the news and amid the wider market turmoil.

It comes as another setback for Steinhoff after it lost out in a battle with Sainsbury's to buy Argos owner Home Retail Group in March and was outbid for London-listed white goods retailer Darty.

Steinhoff added in its statement it "notes the full year results for the year ended 27 March 2016 released by Poundland on 16 June 2016, the recent movement in the share price of Poundland and the impact of the EU Referendum on global markets".

Its bid interest in Poundland comes after the set-price retailer saw its shares slump by a third in a year following tough trading and a difficult takeover of rival 99p Stores.

Annual results last week laid bare Poundland's sales woes as underlying pre-tax profits fell 13.5% to £37.8 million in the year to March 27.

Bottom-line pre-tax profits crashed 83.7% to £5.9 million, but this included converted 99p Stores.

Poundland's outgoing boss Jim McCarthy remained tight-lipped on the Steinhoff interest as he unveiled annual results last week.

But he admitted the group had seen ''difficult times'', adding the 99p Stores were in a ''very poor state'' when it finally completed the £55 million takeover after a lengthy competition inquiry.

Steinhoff has until 5pm on July 13 to make a firm bid for Poundland or walk away under City takeover rules.

It has built up a 23% stake in Poundland and appears determined to expand further across Europe, having tried and failed to gatecrash two deals in recent months.

David Stoddart, analyst at Edison Investment Research, said Steinhoff may yet come back with a sweetened proposal.

He said: "Steinhoff's statement gives it the option to come back with a higher offer for Poundland.

"This will hinge on how they are funding the transaction - if the finance is in sterling, nothing changes, but if not, following today's sharp fall in the pound Steinhoff will enjoy greater room for manoeuvre and we would not be surprised to see it return with a more attractive offer, the cost of which may be mitigated by currency moves."

Steinhoff is backed by South African retail billionaire Christo Wiese, whose Brait investment group also owns controlling stakes in Virgin Active, New Look and food chain Iceland.

Steinhoff also owns Conforama in France, as well as a number of retailers across Europe, Australasia and Africa.