Poundland to buy out budget rival 99p Stores - and prices WILL rise
There's bad news for bargain hunters as 99p Stores are set to become Poundland shops.
The 99p Stores group, which has over 250 high street outlets, is about to be taken over by its budget rivals. The move will see all stores rebranded Poundland, meaning products will raise by a not too significant 1p.
The pound shop specialist believes it has got a bargain after agreeing a £55million deal.
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 know-how and range to 99p Stores."
The deal is worth £47.5 million in cash, plus £7.5m in new shares. The takeover is dependent on approval by the Competition and Markets Authority. Informal talks have already been held with the regulator, which said it has not yet decided whether it needs further scrutiny.
A Poundland spokeswoman confirmed prices would increase to a pound.
The 99p Stores was founded by Nadir Lalani in 2001. Following the closure of Woolworths in 2008 it has been seen as a cut-price favourite for high street shoppers and now has 251 stores.
Mr Lalani arrived in the UK from Tanzania in the 1970s. He began 99p Stores from a single site in Holloway, North London.
Annual sales were £370m last year, up to February, with underlying earnings of £6.1m.
In a CNN interview in 2012, Mr Lalani said the key to the chain's success was its buying strategy and it had also benefited from the economic downturn "to a certain extent".
He said: "We make very fast decisions. Whatever people want to sell. They say we want to get rid of this stock. And we buy those stocks straight away.
The deal would also see Poundland take over a warehouse and distribution centre. It would also allow the firm to expand its presence in the south of England, where it has been under-represented.
A spokeswoman for Poundland, which has nearly 600 stores in the UK, Ireland and Spain, said it has not decided on an exact timeframe for the rebranding.
