Poundland Group plc, Europe’s leading single price general merchandise retailer and 99p Stores Ltd, are pleased to announce that they have signed a conditional sale and purchase agreement for Poundland to acquire 99p Stores for an enterprise value of £55 million.
Poundland believes that the combination of the two businesses will provide better choice, value and service for 99p Stores’ customers. The proposed transaction includes 99p Stores’ network of 251 stores, which serve more than two million customers a week, as well as its warehouse and distribution centre.
When the two businesses are fully integrated, the proposed transaction is expected to enhance earnings per share for Poundland’s shareholders.
The cash consideration of £47.5 million and the cash costs associated with the integration and restructuring of 99p Stores will be funded by an equity placing to be undertaken at or immediately prior to the closing of the transaction and an increase in Poundland’s revolving credit facilities, reflecting its focus on preserving a conservative financial profile to support the capital investment plans in its business.
The acquisition is conditional on the approval of the Competition & Markets Authority (CMA). Given the size of the two companies, the CMA will review the proposed transaction and Poundland and 99p Stores have already held discussions with the CMA regarding the proposed transaction.
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. We look forward to working with the CMA as it undertakes its review.”
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