Hedge fund swoops in the battle for Poundland
THE battle for control of Poundland took a fresh twist after a voracious New York hedge fund raised its stake in the high street chain to nearly 25pc.
The board of Poundland has agreed to a £610m takeover by South African retail group Steinhoff, whose UK empire already includes furniture chains Bensons for Beds and Harveys.
But the deal has been dogged by interventions from activist investor Elliott Advisors, which is run by Paul Singer, a self-made billionaire who has been criticised for presiding over a ‘vulture fund’.
The 72- year- old has raised Elliott’s stake in Poundland from 22.7pc to 24.9pc with the purchase of some 6m shares for 223p each.
Singer now holds a stake big enough to block the proposed takeover of Poundland – and a bigger holding than the 23.6pc slice of the company already owned by Steinhoff.
However, market sources suggest that the deal is likely to go through, and Singer is merely raising his stake in Poundland so that he can make a quick profit.
He has built Elliott’s holding in the company by buying shares for between 220p and 224p – less than the 227p a share Steinhoff has offered for Poundland.
Singer has already forced Steinhoff to improve its offer from 220p a share to 227p – with Steinhoff declaring that the sweetened bid was final.
This means that under takeover rules, Steinhoff cannot raise the offer any further – adding to suspicions that Singer is looking to eke every penny he can out of the deal rather than block it.
Every share that Singer buys for less than 227p will turn a profit if he agrees to sell them to Steinhoff.
Should the deal collapse, it is likely that Poundland shares would tumble, leaving Singer out of pocket.
The shares closed down 0.75p at 223.5p yesterday. Singer’s interest in Poundland comes at a difficult time for Steinhoff.
The company this week warned that the fall in the value of sterling following the EU referendum could have an adverse impact on its British businesses.
But a failure to pull off the Poundland deal would be an embarrassment for Steinhoff following its unsuccessful bids for the former Argos owner Home Retail Group and Londonlisted Darty.
Poundland shareholders will vote on the proposed takeover on September 7.
Steinhoff requires the support of 75pc of Poundland shareholders, excluding itself, for the deal to go through. It means that Singer could use the stake he has built through Elliott to block the takeover.