Poundland has confirmed it will push ahead with its bid to acquire 99p Stores, triggering a full ‘phase II’ probe by the Competition and Markets Authority (CMA).
- CMA to conduct full ‘phase II’ probe
- Poundland “confident” deal will not fall foul of competition authorities
- Retailer aiming to acquire 99p Stores’ 251 shops
The value retailer said today it has “considered its options carefully” and wants to proceed with the full review of the £55m deal. Poundland had been given until this Friday to decide whether to push ahead with the deal and face a full probe, or drop its acquisition bid.
The CMA has a deadline of October 23 to deliver its verdict on whether to allow the deal. The investigation will be led by a group of “independent panel members” supported by CMA staff.
Poundland said in a statement this morning it “remained confident” the merger would “provide better choice, value and service for 99p Stores’ customers and represents a great deal for all stakeholders in both businesses”.
Chief executive Jim McCarthy said the firm “looks forward” to working with the CMA.
Poundland struck a deal in February to acquire 99p Stores’ network of 251 shops, trading as 99p Stores and Family Bargains, as well as its warehouse and distribution centre.
An initial probe by the government body found the buyout could worsen the position for shoppers in 80 shopping areas across the UK, due to a potential “reduction in quality”, fewer promotions and store closures stemming from a lack of competition.
Shore Capital analyst Darren Shirley said today the deal makes “eminent sense”. He argued: “Poundland’s brand and retail offer is significantly superior to that of 99p Stores in terms of its authority, consistency, product quality and price value credentials, alongside superior store standards”. But Shirley said the acquisition will not be the “end game” for Poundland in the UK as it seeks further growth.