The popular British budget store Poundland is set to buy out rival chain 99p Stores for an estimated £55 million, the BBC can confirm. Both companies have agreed to a deal of £47.5 million in cash and £7.5 million in stock.
The report indicates that 99p Stores will be converted into Poundland outlets over a period of time. Cheif executive of Poundland, Jim McCarthy, believes the buyout will be beneficial for customers.
Through working together, Poundland will improve choice, value and service for 99p Stores' customers, bringing Poundland's proven knowhow 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.McCarthy also said the company has amassed a wealth of experience over the last 25 years and its business connections to such popular brands as Coca-Cola, Walkers and Procter & Gamble would benefit 99p Stores once the transaction has been approved by the Competition and Markets Authority (CMA), which could take up to two months.
As well as selling Poundland-branded products, the company also hopes to bring innovation and new ideas to the business, including a DIY range from the BBC show Ground Force's Tommy Walsh.
If you look at the two businesses, in terms of infrastructure we have a lot more resource to develop and invest in innovation.According to The Guardian, the transaction will help increase Poundland's, "dominance of the single-price retail market," by merging 99p Store's 251 outlets to the company's own estate which consists of nearly 600 stores.
Poundland has been trading since April of 1990 and was founded by Dave Dodd and Stephen Smith. It is considered one of the biggest discount retailers in Europe with an estimated 2.75 million customers per week.
Rival chain 99p Stores was founded in London in 2001 by Nadir Lalani. Following the collapse of Woolworths in 2008, 99p Stores have become a mainstay on British high streets and have since grown in popularity over the years, marking the chain as a major competitor to Poundland.
Poundland and other budget retail outlets have proven popular with the British public, particularly during times of economic turmoil. Known YouTube personality and tech video blogger Stuart Ashen has made a reputation out of reviewing products from Poundland on his channel. Even celebrities have been known to do their Christmas shopping there.
With Poundland purchasing 99p Stores, the company is not only aiming to operate 1,000 stores, but also open a warehouse and distribution centre.
[Image via The Guardian]