Steinhoff offers R1.34 billion to buy Iliad Africa

Steinhoff International Holdings Ltd. offered to buy tilemaker Iliad Africa Ltd. for R1.34 billion to expand the retailer’s building-materials business.

Steinhoff, South Africa’s biggest furniture seller, offered 10 rand a share in cash, Iliad said in a statement on Thursday. An independent board of Iliad’s directors has recommended shareholders approve the proposed acquisition.

“Iliad is of the firm view that combining the businesses of Iliad and Steinbuild will promote the growth of both businesses and sustainably strengthen its position in the market,” Iliad said. Steinbuild is Steinhoff’s building materials unit.

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Iliad shares were little changed at 9.70 rand a share as of 2:58 p.m. in Johannesburg. The stock gained 6.3% on Monday, when the company said it was in talks that may have a material impact on its share price.

Steinhoff stock climbed 1.2%, bringing its increase this year to 34% and giving the company a market value of 293 billion rand.

Steinhoff’s offer price includes the assumption that Iliad will pay a special dividend of 24 cents a share before the transaction is completed, Iliad said. Taken together, the Steinhoff offer and the dividend would represent a 24.6% premium to Iliad’s 30-day volume-weighted average price through July 15, the company said.

Steinhoff has proposed to buy Iliad through a scheme of arrangement, which requires the approval of 75% of Iliad shareholders. Investors with control over about 69% of the company’s shares have expressed support for the deal, Iliad said.

Steinhoff has been on the acquisition trail ahead of a proposed listing in Frankfurt later this year. In November, it agreed to buy closely held clothing retailer Pepkor Holdings Pty Ltd. for 62.8 billion rand, adding clothing for the first time in a bid to become one of the world’s biggest discounters.

Steinhoff also agreed to buy out fellow investors in furniture chain JD Group Ltd. in April, delisting the unit. JD Group has 14 retail brands, including The Tile House and Hardware Warehouse.

- Bloomberg