Steinhoff's plan to buy Poundland "credit positive" - Moody's

JOHANNESBURG, June 20 (Reuters) - Steinhoff International's acquisition of a stake in British retailer Poundland is good for the South African firm's credit profile, credit ratings agency Moody's said on Monday.

The owner of Conforama, Europe's second largest furniture group, last week said it had bought 23 percent of no-frills retailer Poundland and said it might make a cash offer for the rest of the firm, a move Moody's sees as "a credit positive".

An investment in Poundland would give Steinhoff an annual return of roughly 10 percent, Moody's said in a note, and also said this would be better than what it could get from current low and negative interest alternatives.

Steinhoff, which has been hunting for new assets in Europe since listing in Frankfurt last year, has around 3.7 billion euro in cash to fund opportunistic acquisitions, Moody's said.

Moody's said using Poundland's current market value, Steinhoff's cash would be "more than sufficient" to fund the 556.2 million euros ($629.95 million) needed to buy the rest of the British retailer.

"Given Steinhoff's past approach to acquisitions, we expect any offer would have a conservative valuation, and that in a bidding war, Steinhoff would walk away from expensive valuations," the ratings agency said.

($1 = 0.8829 euros) (Reporting by TJ Strydom. Editing by Jane Merriman)