Budget retailer Poundland is eyeing significant expansion by confirming it is interested in buying 99p Stores.
The company explained that it has reached an agreement with its rival which will see the signing of a conditional deal for £47.5 million in cash and £7.5 million in shares. Poundland is hoping to complete the acquisition in the coming weeks but it still needs to gain approval from competition authorities.
Should Poundland be given the green light it will see it continue its goal of creating a 1,000-strong chain of stores across the UK. Under the agreement, all 99p Stores will be rebranded as Poundland and will help to build on the company's portfolio of around 600 outlets nationwide.
Jim McCarthy, Poundland chief executive, said: "People are ever-more price conscious, shopping around for bargains. Through working together, Poundland will improve choice, value and service for 99p Stores’ customers, bringing Poundland’s proven knowhow and range to 99p Stores."
Rise in the discount store
Consumers across the UK are becoming savvier than ever before when it comes to shopping. This has had a major knock-on effect in the retail world with companies like Poundland coming to the fore. In the supermarket sector, traditional names such as Tesco, Asda, Sainsbury's and Morrisons have all come under increased pressure due to the rise of discounters Aldi and Lidl.
It has allowed the likes of Poundland to grow in confidence. The company floated on the stock exchange in March 2014 at 300p per share. A 12 per cent boost in profits announced on Friday (February 6th) led to a spike in share price which soared by 15.4 per cent at close of trading last week, valuing the company at £970 million.
Poundland first launched in 1990 and has enjoyed considerable growth in the UK, Ireland and Spain. It has already outlined plans to open 16 new shops in the coming year.
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