‘This Is Not A Lehman-Like Moment’: How Will Brexit Affect African Mergers, Trade Relations?
South Africa-based Steinhoff, the second-largest furniture retailer in the world, was in the midst of a takeover bid for U.K. retailer Poundland when the Brexit referendum results announced a split from the E.U.
The day after the referendum, Steinhoff said Poundland had rejected an offer, which most likely came as a relief, BusinessDayLive reported. But Steinhoff already owns 23 percent of in the firm, which in rand terms is worth 10 percent less post referendum.
A family trust belonging to Christo Wiese, South Africa’s second-richest man, is the largest shareholder in Steinhoff, Forbes reported. Steinhoff owns U.K. retailers Harvey’s and Bensons for Beds, which don’t account for much in its large portfolio of retail and manufacturing businesses. Investors cut 5.4 percent from its share price on Friday.
Brexit will tarnish the U.K.’s appeal for Steinhoff, which failed to buy Home Retail Group (the owner of Argos) in March, AcquisitionsDaily reported. It is possible Steinhoff will make a higher offer for Poundland before July 13. The fall in sterling presents opportunities to take advantages of currency moves.
Fashion retailers are at risk from a Brexit fallout as they buy significant volumes of goods overseas and pay in dollars, Telegraph reported. They’ll be hammered by increased import costs from the falling value of the pound.
Wiese also controls Brait, another South African firm heavily exposed by Brexit. The company has been buying retailers aggressively in the U.K. including Virgin Health Clubs and fashion chain New Look. Those now account for the majority of its portfolio. Brait share price lost 5 percent on Friday.