Steinhoff’s European unit attracting interest for buyout

Retailer which runs the Dealz, Poundland and Pepco discount chains gauging interest

Steinhoff International’s European retail unit runs the Pepco and Poundland discount chains.

Steinhoff International’s European retail unit runs the Pepco and Poundland discount chains.

 

Steinhoff International’s European retail unit, which runs the Pepco and Poundland/Dealz discount chains, is attracting interest from buyout firms, people with knowledge of the matter said.

Advent International and Partners Group Holding are among private equity firms considering bids for Pepco Group, said the people, who asked not to be identified because the information is private.

Steinhoff has been gauging interest from potential buyers alongside its preparations for an initial public offering, the people said.

Steinhoff is seeking to value Pepco Group at more than €4 billion ($4.4 billion) in any sale, two of the people said. No final decisions have been made, and there’s no certainty the buyout firms will proceed with formal offers, the people said.

Representatives for Pepco Group, Advent and Partners Group declined to comment while Steinhoff didn’t immediately respond.

Steinhoff, the scandal-ridden South African retailer, said in November it’s evaluating strategic options for Pepco Group including a potential listing. The business, formerly known as Pepkor Europe, has about 2,700 stores in 14 countries.

Operations

Pepco Group is run by Andy Bond, the former chief executive officer of UK supermarket chain Asda. Its operations include the Pepco discount clothing and decor chain, which has a presence in eastern European markets like Poland, Romania and Bulgaria.

The company also runs Poundland stores in the UK, where most items are sold for one pound, and Dealz outlets in Ireland, Spain and Poland.

Bond said in September he expects the company’s earnings before interest, taxes, depreciation and amortization to rise about 18 per cent in the latest financial year.

Earnings before interest, tax, depreciation and amortisation (Ebitda) for the year ended September 2019 is estimated between €320 million and €330 million, he said.

Any transaction would add to the $249 billion of private-equity deals announced in Europe over the past year, according to data compiled by Bloomberg. Advent completed its £4 billion ($5.2 billion) takeover of UK defence supplier Cobham this month. – Bloomberg