Value retailer Poundland has recently announced its plans to raise up to £50m through the placing of new shares in order to fund its acquisition of smaller high street rival 99p Stores.
The deal for 251 99p Stores across the UK was cleared by Britain’s competition regulator last week, and the value retailer anticipates a complete acquisition by 28th September.
Poundland plans to initially support 99p Stores during the busier Christmas trading period. Following this, Poundland will turn its attention to converting the stores to the Poundland formula, with the majority converted in the next 12 months.
In a statement, Poundland said: “We are pleased that the CMA has cleared the acquisition of 99p Stores, with no remedies required. We remain excited by the long term potential for the acquisition and the strategic rationale for this transaction is compelling.
“This is largely an asset deal, increasing our store count by 40% through adding 251 stores to our existing UK store estate. We expect significant benefits from converting 99p Stores to Poundland, in terms of sales from introducing our range and value, from margin benefits through increased scale and from the significant cost dilution of adding 251 stores to our portfolio.”
The retailer also announced its current trading figures. For the 14 weeks that ended 20 September 2015, sales were ahead by 6.6% on a constant currency basis. While sales on an actual currency basis increased by 5.9% to £303.2m.
The British retailer stated that it remains confident in its full year results and expects group profits before tax to be in line with market consensus.