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Shares in cheap tat retailer Poundland (PLND) are up 13% this morning after (perhaps ironically) accepting a £2.22 per share cash offer from South African cheap tat retail specialist Steinhoff International, increasing its existing stake in the company to, well, 100%. This is the first European takeover success for Steinhoff this year, with the company notably failing to acquire Home Retail Group (Argos turned out to be a bit too classy). But while Christo Weise is jumping up and down doing burpees at one of his Virgin Active gyms, one can’t help but wonder how much life the price-led (read cheap n nasty) retail endeavours Steinhoff likes so much actually have left in them – especially in the UK where everyone loves their job, earns loads of money and works out regularly.
With the ‘business of the moment’ preferring to save cash on premises and go onlin
e, supported by very good logistics and technology, this allows the consumer to spend more time at work or at the gym, which is what everyone thinks they like. Shopping online gives us all more time to fill up with the things we moan about that take up all our time (I’m delighted to say I’m writing this on my smart tablet using brain wave technology while taking a mid-morning nap). The UK high street is suffering from a combination of high costs and dwindling footfall, but this is obviously being seen as a great value opportunity by Steinhoff.
Weise’s already snapped up Harvey’s (who are they?), Bensons for Beds (a bed retailer?), and most significantly New Look (which is actually quite old). There are still plenty of struggling, outdated shops out there. I doubt Steinhoff will encounter too many hurdles in purchasing the lot.
Poundland (PLND) currently trading at 220p / +13%; Accendo Markets does not have a rating or target price on Poundland (PLND)
Augustin Eden, Analyst (13 Jul)
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