Poundland is pushing ahead with its takeover of the rival 99p Stores, raising £50 million in a share placement to help to fund the deal, despite warning on its first-half profits.
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The deal for 251 99p Stores across the United Kingdom was cleared by Britain’s competition regulator last week, and the value retailer anticipates a complete acquisition by 28th September.
The Placing will be conducted through an accelerated book-build process which will be launched immediately following this announcement, in accordance with the terms and conditions set out in the Appendix to this announcement.
The group said that total sales for the 14 weeks ended 20 September on actual currency basis increased by 5.9% to £303.2m. Following this, Poundland will turn its attention to converting the stores to the Poundland formula, with the majority converted in the next 12 months.
As highlighted at the time of announcing its 2015 preliminary results, the group said it expects profits to be phased towards the second half of the current financial year given tough comparables in the first half, the impact of the Euro and softer sales comparables in H2.
Poundland, led by chief executive Jim McCarthy, is targeting 1,400 stores and broker Jefferies said the company intends to “participate in further industry consolidation” as well as rolling out about 60 stores a year. We will open our tenth store in Spain before the end of the calendar year.
The group said today it expects to have 638 stores in the United Kingdom and Ireland at the end of the half year, with net growth of 50 over the period and 70 for the full financial year.
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99p Stores generated sales of £370.4m and earnings of £6.1m in the year to February 1, 2014, but Poundland said the chain’s financial position “has weakened somewhat” since it originally examined the business before the takeover offer.
