Poundland is set to acquire its rival discounter 99p Stores for £55 million.
The deal, reported in The Times, comprises a cash consideration of £47.5m, and the issue of new Poundland shares worth £7.5,.
Having slashed prices in the past to less than £1 to compete with goods being sold at 99p, the two businesses will now be able to work together to provide “better choice, value and service for 99p Stores’ customers”, Poundland said in a statement.
The proposed transaction includes 99p Stores network of 251 shops, which trade as 99p Stores and Family Bargains, as well as its warehouse and distribution centre. Those businesses serve more than two million customers a week, and recently extended their fresh produce offering.
The Competition and Markets Authority (CMA) will now decide whether to give the acquisition its approval, which is expected to take at least two months.
Jim McCarthy, chief executive of Poundland, told The Times that the acquisition was “a good deal for both businesses”.
“Through working together, Poundland will improve choice, value and service for 99p Stores’ customers, bringing Poundland’s proven know-how and range to 99p Stores,” he said. “We also believe that we can improve the performance of the 99p Stores estate and generate further value for Poundland’s shareholders.
“We look forward to working with the CMA as it undertakes its review.”
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