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Poundland agrees to takeover from Steinhoff International
Discount chain Poundland has agreed to a £597m takeover by South African retail group Steinhoff International.
Steinhoff is paying 222 pence per share for the discount retailer.
Steinhoff had made an informal approach for Poundland last month, but the offer was rejected.
Since 1990, Poundland has opened more than 750 shops in the UK, Ireland and Spain. In September 2015, Poundland took over rival 99p Stores but has since seen a slowdown in sales.
Its share price had fallen from 418p in February 2015 to below 200p, with pre-tax profits falling sharply.
The pound has also dropped about 15% against the rand since Steinhoff made its approach for Poundland in June.
Shares in Poundland rebounded 12% to 220p on Tuesday following news of the deal.
Poundland chairman Darren Shapland said: "The Poundland board believes that Steinhoff's all-cash offer presents Poundland shareholders with an opportunity to realise their shareholding at a certain and attractive price."
Steinhoff, which already had a 23% stake in Poundland, owns 6,500 retail outlets in 30 countries. It owns 40 retail brands, including Bensons for Beds and Harveys in the UK.
Analysts said the outlook for Poundland and other discount stores in the UK looked bright given that the vote to leave the EU is expected to dent economic growth.
"Prospects look good for Poundland," said Jonathan Pritchard, retail analyst at Peel Hunt. "A possible consumer downturn plays into discounters' hands as consumers looking to save cash trade down."
Steinhoff has been trying to increase its exposure in Europe this year. The purchase of Poundland comes after an unsuccessful attempt to buy Argos owner Home Retail Group, when Sainsbury's ended up as the successful bidder.
Steinhoff also failed in an attempt to buy French electronic goods retailer Darty.