Steinhoff sells half of POCO to Andreas Seifert, ending a bitter dispute
Berlin/Budapest — Steinhoff International, the global retailer struggling to survive an accounting scandal, agreed to end a bitter dispute by selling half of German furniture chain POCO to former business partner Andreas Seifert.
Forbes reported on Wednesday that Steinhoff also sold out of Hungarian electronics retailer Extreme Digital after its partners moved to cut ties with the company, which is embroiled in an accounting scandal.
The impetus for the deal with Seifert came from a German judge who, on Wednesday, urged both sides to settle for an amount that is a multiple of POCO’s earnings. Eventually they valued POCO at €532.5m, amid a fractious hearing that was stayed twice to allow private talks.
"We’ve been fighting so long, but finally things moved so quickly," Seifert said when leaving the courtroom.
Seifert, owner of furniture retailer XXXLutz, has battled on many fronts against his former partners, filing lawsuits in three countries as well as criminal complaints. The German cases, filed in 2015, concentrated on who owned POCO. Seifert and Steinhoff initially each held 50% and both claimed to have kicked out the other partner under company rules. In February, an Amsterdam court ruled that Steinhoff couldn’t claim full ownership. At Wednesday’s hearing in Dortmund, Germany, the court also hinted that Steinhoff’s position has weakened.
Regarding the Extreme Digital deal, Hungary’s competition authority approved the disposal of a 50.4% shareholding to the company’s two founders for an undisclosed sum. Steinhoff bought the controlling stake in 2015 as part of an aggressive expansion through Europe, the US and Australia.
Hole in accounts
Steinhoff has lost more than 90% of its value since the company reported a hole in its accounts in December. The dispute with Seifert had contributed to its woes. A lawyer for Steinhoff said at the Dortmund hearing that the company had previously failed in its attempts to reach out to Seifert. Recent court filings were meant as a "peace proposal to Dr Seifert," she said.
Steinhoff had argued POCO needs to be valued at €650m whereas Seifert saw it at €472m. The deal is preliminary and details will be finalised in the coming weeks, including sorting out anti-trust concerns. The sale price includes POCO’s real estate.
While at the beginning of the hearing Seifert seemed to be reluctant to agree to talks, the framework for the deal came about after two private sessions. "We negotiated like horse or carpet dealers and met on the middle ground," POCO founder Peter Pohlmann said. "POCO fits better with XXXLutz."
Steinhoff’s earlier disposals include the sale of shares in its spun-off KAP Industrial and investment holdings company PSG Group in SA. In Europe, it’s sold a 17% stake in French online retailer Showroomprivé and a flagship store in Vienna.