O’Byrne had seemed set to stay at Poundland despite the retailer’s £610m takeover by the South African conglomerate earlier this year.
Steinhoff was understood to have backed O’Byrne and reportedly offered him a share package worth as much as £2.7m to convince him to stay.
But O’Byrne, who only took the Poundland hot seat in July, has now quit to take up his new role at Sainsbury’s on January 9 next year.
Sainsbury’s boss Mike Coupe said O’Byrne – a former boss of B&Q’s UK and Ireland operations and ex-group finance director of Dixons Retail – “brings a wealth of retail and finance experience” to the grocer.
Coupe also lauded O’Byrne’s “track record in growing businesses.”
O’Byrne added: “Sainsbury’s is a strong business with a clear strategy and I am really excited about joining at this important point in Sainsbury’s journey. I look forward to working with Mike and the team from the New Year.”
Sainsbury’s said Ed Barker would continue in his role as interim chief financial officer until O’Byrne joins the business and would “continue to have a leading role” at the grocer.
In a note to Poundland staff, Bond said he would “lead the day to day operation of the company” in his new role as executive chairman.
The retailer also revealed the appointment of Sean Cardinaal, a long-standing member of the Pepkor leadership team, to its board.
Cardinaal will lead the development of Poundland’s international sourcing and its overseas expansion – a role that will see him take the helm of the retailer’s Dealz business in Spain.
Bond said: “These changes will put Poundland at the centre of all Pepkor operations in both the UK and Europe.
“Together with the recently announced additions to the Poundland Board of Roy Ellis, Barry Williams and Tim Goalen, we are now in a much stronger position to develop and grow Poundland as part of a very strong Steinhoff business.”