Poundland agreed to buy 99p Stores for £55 million as it seeks to boost its presence in the booming UK discount-retail industry.
The proposed deal, which depends on approval by UK antitrust authorities, adds a business with more than two million weekly customers and 251 stores, the England-based company said in a statement.
Poundland serves an average of £5 million customers a week from almost 600 outlets.
The transaction illustrates the attraction of discount retailing in the UK as a growing number of shoppers switch to bargain stores with fixed prices. Poundland, which sold shares in an initial public offering last year, has said it sees potential for more than 1,000 stores in the UK
"By bringing 99p into the Poundland family, that 1,000 number has increased,” Chief Executive Officer Jim McCarthy said.
Poundland shares rose as much as 10 per cent, the steepest intraday gain since the shares started trading on 12 March 12.
Poundland plans to convert 99p outlets to its own brand, adding a penny to prices at the acquired stores, McCarthy said.
"Our quality in Poundland more than compensates for the 1p,” the CEO said. “People probably will find the one pound price point just a little bit better.”
News by Bloomberg, edited by ESM
