Poundland proposes £55m acquisition of 99p Stores

Poundland Group has proposed the acquisition of its rival retailer 99p Stores for £55m, according to a statement to investors on Friday.

The consideration will include cash of £47.5m and the issue of Poundland shares worth £7.5m upon completion.

If it goes ahead, the transaction will include 251 stores owned by 99p Stores, which cater to more than 2m customers every week, plus a warehouse and distribution centre.

In the year to 1 February 2015, 99p Stores generated £370.4m in sales.

“Poundland believes that the combination of the two businesses will provide better choice, value and service for 99p Stores' customers,” the company said.

Whether the acquisition goes ahead or not, Poundland claimed that its board is committed to trialling further expansion in continental Europe.

Company chief executive Jim 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."