United Kingdom : Poundland Launches £50m Placing To Pay For 99p Stores

Poundland Group PLC Thursday raised GBP50 million through the placing of shares in order to fund its acquisition of 99p Stores Ltd, and said that it expects core pretax profit for its full financial year to meet market expectations, although it will be weighted towards the second half.

The company stood by the strategic rationale and cost savings that can be achieved from buying 99p Stores – despite its rival’s deteriorating financial position during the four months the acquisition was being probed by the competition authorities.

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.

After the deal completes Poundland plans to support 99p Stores during the most important trading quarter from Halloween through to Christmas, after which it will focus on converting the stores to the Poundland formula.

It has also been testing the format with Spanish consumers and expects to open its tenth outlet in Spain by the end of this year. While sales on an actual currency basis increased by 5.9% to £303.2m.

The group said pre-tax profit for the six months was expected to be lower than in the first half of 2015.

“Poundland will report its interim results for the period ending 27 September 2015, on 19 November 2015”.

In June, the discounter that sells everything at £1 warned of a “relatively subdued” first half with sales for the 11 weeks to mid-June 4.1 per cent higher on a current currency basis – a slowdown compared to 11.8 per cent growth in 2014/15.

Poundland, which has been on a rampant store expansion programme, opened 50 new stores in the UK and Ireland in the first half of the year, compared with 28 in the previous year.