Poundland agrees to buy 99p Stores for 5,500,000,000p

Poundland hopes to acquire 251 shops, expanding its dominance of the single-priced retail market

Poundland, UK
(Image credit: 2014 AFP)

Poundland is set to increase its dominance of the single-priced retail market with plans to buy rival 99p Stores for £55m.

The transaction will add 251 outlets to its 600-strong estate, as well as a warehouse and distribution centre.

99p Stores employs around 5,000 staff, serving more than two million customers a week, with annual sales reaching £370.4m in the year to 1 February 2014.

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However, it is said to have "very thin" profit margins compared with Poundland, which reported a 12 per cent rise in half-year profits to £9.3m in November.

Harry Wallop, a Daily Telegraph journalist who set up his own "pound shop" as part of a Channel 4 Dispatches programme, revealed that the single-priced retailers are not "inflation-busting" in the strictest definition of the term, as many of their items have shrunk over the years.

Some popular items are sold in non-standard sizes, with more emphasis on bright banners advertising bargains, such as "50 per cent extra free", than their supermarket counterparts.

The deal with 99p Stores will help Poundland go part way to achieving its aim of operating 1,000 stores and accelerate its ambitions to expand in the south.

The retailer, which floated on the stock market last year, offered £47.5m in cash, as well as £7.5m in shares, to the Lalani family which owns 99p Stores.

The transaction will be subject to "close scrutiny" from the Competition and Markets Authority, says The Guardian.

A spokeswoman for Poundland said that, over time, the 99p Stores will be converted to Poundland.

Meanwhile, comedians and poets have been making the most of the deal on Twitter:

Poundland to buy 99p Stores for, I presume, 99p. Surely. Otherwise their whole premise is a lie. — David Schneider (@davidschneider) February 6, 2015

POUNDLAND if I had a poundfor every Poundlandi've seen,i would have enough moneyto buy one itemin every Poundlandi've seen.— Brian Bilston (@brian_bilston) February 6, 2015

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