Poundland acquisition is our Deal of the Month
DISCOUNT retailer Poundland’s agreement to take over one of its High Street rivals has been chosen as our Deal of the Month for February.
It is to acquire 99p Stores for £55m.
The deal will see Willenhall-based Poundland, Europe’s leading single price general merchandise retailer, put up £47.5m in cash and issue new Poundland Shares with a value of £7.5m.
The acquisition is dependent on Competition & Markets Authority (CMA) approval.
Poundland suggests the combination of the two businesses will provide better choice, value and service for Northamptonshire-based 99p Stores’ customers.
The proposed transaction includes 99p Stores’ network of 251 stores (trading as 99p Stores and ‘Family Bargains), which serve more than two million customers a week, as well as its warehouse and distribution centre.
In the year to February 1, 99p Stores had sales of £370.4m, Underlying EBITDA of £6.1m, gross assets of £91.2m and net assets of £11.2m.
Jim McCarthy, chief executive of Poundland, 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.
99p Stores was advised on the deal by the Birmingham office of law firm Mills & Reeve and accountancy and advisory firm KPMG.
Freshfields advised Poundland.
Commenting on the Deal of the Month choice, TheBusinessDesk.com’s Midlands editor Andy Coyne said: “Following the NEC deal the previous month the choice for February was again a no-brainer.
“While there is a lot of comment on the rise of the discount supermarkets, sometimes what is happening with the general merchandise retailers is overlooked but their story is equally impressive.
“Poundland is a cracking West Midlands company and it is advancing through domestic expansion, stores in overseas markets and, now, by strategic acquisition.
“It’s a growth story that clearly has a long way to run.”
