Poundland faces possible takeover bid from Steinhoff

Poundland could face a takeover bid after South African company Steinhoff said it was considering making an offer for the UK discount retailer.

Shares in Poundland rose 2% after having surged 24% on Monday on takeover speculation.

The UK retailer told its investors to take no action as there was no certainty an offer would be made.

Under UK takeover rules, Steinhoff has until 13 July to announce a firm intention to bid for Poundland.

Steinhoff, which owns the furniture chain Harvey's in the UK, makes most of its products in developing countries, and sells its furniture across Europe.

Earlier this year, Steinhoff pulled out of a takeover battle for Argos owner Home Retail Group. leaving the way clear for supermarket chain Sainsbury's.

The South African company also failed to take over French retailer Darty.

Steinhoff International Holdings is worth $22bn (£16bn) while Poundland is valued at more than £500m.

Since 1990, Poundland has opened about 600 shops in the UK, Ireland and Spain, and has plans to open 16 new shops a year for the next two years in the UK and Ireland.

The retailer sells everything at the single price point of £1 in its UK stores. It also has operations in Ireland and Spain under the name of Dealz.

In September 2015, Poundland took over rival 99p Stores but has since seen a slowdown in sales.