Poundland deal called in by competition watchdog

POUNDLAND’S £55m takeover of discount rival 99p Stores is under threat after competition regulators said they want to examine the deal.

The Competition and Markets Authority (CMA) warned the deal threatens the “choice, value and service for shoppers”.

It now plans to launch an in-depth investigation into the deal unless Willenhall-based Poundland offers to make concessions, such as selling off stores.

Poundland announced in early February that it had signed a conditional sale and purchase agreement to take over its High Street rival.

But its announcement to the London Stock Exchange warned that he acquisition is dependent on CMA approval.

Poundland said it and 99p Stores had already held discussions with the authority regarding the proposed transaction.  

The Black Country firm suggested the combination of the two businesses will provide better choice, value and service for Northamptonshire-based 99p Stores’ customers.

But the CMA said today it has found 80 local areas where the retailers are competitors and a further 12 where will they be in the near future due to store openings.

It said: “The CMA found that the loss of competition between the companies may lead to a worsening of their offer locally, through a reduction in quality, fewer promotions or closure of their stores.”  

In a statement the discount retailer said: “Poundland is carefully considering the CMA’s announcement, together with the full detail behind it and will make a further announcement in due course.”