Poundland to buy rival 99p stores for £55 millionComments Off on Poundland to buy rival 99p stores for £55 million
The deal, which sees Poundland pay £200,000 for each of 99p stores’ 251 shops, has been agreed by both sides but must now go to the Competition and Markets Authority for approval, where officials could demand the company shut some stores to allow for more competition.
If successful it would see Poundland with more stores than WH Smith’s high street portfolio and bigger than both Aldi and Lidl.
The 99p Store founder, businessman Nadir Lalani, will take home £47.5 million from the sale along with a further £7.5 million worth of shares in Poundland.
Investors reacted positively to the news today, sending Poundland shares up 8% to 386.4p. They have risen nearly 30% since joining the stock market last year.
The deal sets Poundland well on its way to hitting the 1000-store mark chief executive Jim McCarthy has previously stated he wants.
Mr McCarthy said: “This is a good deal for both businesses and will benefit customers and shareholders.
“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.
“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.”
Discount and pound stores have soared in popularity during the downturn from 2008 and continue to win over customers.
Poundland recently revealed that over Christmas sales rose by 9.8% to £328.4 million, selling 2.8 million Toblerones and 4.6 million units of wrapping paper to shoppers lured by £1 goods.
Previously, price wars between Poundland and 99p Stores had broken out where the former had reduced prices to 95p, followed by the latter dropping prices to 94p.
Poundland’s previous plans to open 60 new stores this year remain unchanged, the company added.