Poundland to spend rather more than £1 on its first purchase since listing

Just over one month short of its first anniversary as a listed company, Poundland, the UK discount retailer, has announced it is in talks to acquire 99p Stores limited, another UK-based value retailer. 

The 2014 IPO of 50% of Poundland’s shares raised £375m and valued the whole company at over £750m, so spending what is reported to be £55m on the acquisition of 99p Stores shouldn’t dent the coffers too much. 

The rise of discount retailers, not just in the UK but across many countries in the last 10 years, has been quite phenomenal. Helped by the global financial crisis and, one could argue, a level of complacency, supermarket chains such as Aldi and Lidl and other discount retailers like Bargain Booze and B&M have really taken the fight to the traditional retailers. 

Given part of the stated rationale for Poundland’s IPO was to look for “future growth”, this acquisition could be the start of the consolidation of the discount retail space.