Discount chain Poundland (PLND) is up 12.2% to 219.9p as it recommends a cash offer of 222p from South African furniture retailer Steinhoff.
The price may be a premium of 40.3% to the closing price on 13 June before Steinhoff, which lost out on previous bids for Home Retail (HOME) and Darty (DRTY), began building its stake in the business but is a significant discount to the issue price of 300p at the March 2014 IPO.
The company has experienced poor trading thanks to the continuing shift towards online shopping, fears the pound shop phenomenon has run its course and problems with integrating rival 99p Stores, acquired for £55 million in September 2015.
Liberum moves from ‘sell’ to ‘hold’ and ups its price target from 125p to 222p. Analysts Wayne Brown and Adam Tomlinson note the takeout price equates to a March 2017 price to earnings ratio of 21.6 times, commenting that the ‘recommended cash offer is a good result for PLND shareholders and comes at a time when there was more downside risk than upside in our view’.
If approved, the terms of the £597 million offer see shareholders receive 220p per share in cash and 2p through the previously flagged final dividend.
