American private equity groups are at the forefront of the race to buy up-for-sale retailer B&M Bargains which could trigger further acquisitions in the UK value sector.
Bidders including Blackstone, BC Partners, Kohlberg Kravis Roberts, Bain Capital and Clayton Dubilier & Rice are understood to have progressed to the second round of bidding.
A series of them, including KKR and Bain, have direct experience of owning dollar stores and discount chains in the US and it has been suggested those who miss out on B&M may look elsewhere in the sector for an acquisition.
Investment bank Rothschild has been appointed to find a buyer for B&M.
One industry veteran told The Times: “If the B&M deal is completed, that means at least one bidder will be left disappointed at the end of the process.” He added that it would raise the chances of a secondary sale as a “consolation prize” to an under-bidder.
The chain, which is expected to be sold for around £850m, is owned by the Arora brothers, who have driven turnover up from £130m in 2007 to £712m last year. It posted profit of £38m last year.
Single price variety store Poundland is also said to be being groomed for a sale and appointed former Tesco executive Andrew Higginson as chairman this year. The company has grown rapidly since it was bought by Warburg Pincus for £200m in 2010. Poundland would be valued at £500m if a similar multiple was used to value the company as has been used to value B&M.