6-Feb-2015

Poundland To Spend £55m On 99p Stores Buyout

 

The proposed takeover is set to result in 99p Store customers having to pay an extra 1p for goods as they are rebranded.

 

 

Poundland has agreed a £55m takeover of discount rival 99p Stores, subject to clearance by competition authorities.

 

Poundland, which has previously expressed an ambition to double its UK and Ireland network of more than 500 stores, said the deal comprised a cash consideration of £47.5m and the issue of new Poundland Shares with a value of £7.5m.

 

The company's statement said: "Poundland believes that the combination of the two businesses will provide better choice, value and service for 99p Stores' customers."

 

However, it was confirmed that 99p shoppers would have to pay a bit more for each item under Poundland's plans.

 

Its chief executive Jim McCarthy said paying an extra 1p for goods at the expanded Poundland chain, where everything costs £1, would not be a problem for customers.

 

He argued the quality of his offering "more than compensates" and he pointed to the prospect of shorter till queues too as fewer people required change.

 

It planned to take ownership of all 251 stores trading as 99p Stores or Family Bargains, as well the group's warehouse and distribution centre, which would all be rebranded under the Poundland name over time.

 

But Poundland said the acquisition was conditional on the approval of the Competition & Markets Authority (CMA), which had already held preliminary talks with both parties.

 

The statement added: "The CMA may require Poundland to take actions or give remedies to address any impact on competition arising as a result of the proposed transaction.

 

"The CMA will commence its public consultation and review process shortly and this process is expected to take at least two months.

 

"The proposed transaction is conditional on an outcome of this CMA process that is acceptable to Poundland and to the CMA."

 

Poundland opened its first store in 1990 and its growth has formed part of the changing face of the high street since the collapse of Woolworth's in 2008 and the financial crisis.

 

99p Stores was founded by Nadir Lalani with a single site in Holloway, north London, in 2001.

 

The discount sector has become somewhat squeezed given the rise in recent years of supermarket chains such as Aldi and Lidl, where consumers can also complete a food shop.

 

99p Stores had recently expanded its offering to include more food products, including baked goods.

 

 

Skynews.com