Poundland owner weighs break-up of retailer it bought for £1
A flurry of bids for just some of Poundland’s 600 shops could prompt Poundland to consider a break up of the retailer, City AM understands.
US investment firm Gordon Brothers initially sought offers for the entirety of the business, but may instead opt to sell Poundland’s stores to a number of different buyers, sources told City AM.
The owners of the discount retailer kicked off a rush sale of the business earlier this month after buying it for just £1 a little over a year ago.
Gordon Brothers has asked buyers of the whole business to contribute £30m, to cover a loan which it inherited from Pepco, the retailer’s former owners.
Alvarez & Marsal (A&M), the consultancy firm appointed to run the sale, had set a deadline of Monday for final offers to buy Poundland.
A number of bids for the whole business and for a significant number of its stores have been submitted so far, with more expected to be tabled on Wednesday and Thursday.
The parties expected to be making bids include Modella Capital, the owner of Hobbycraft and TG Jones; and Fortress, the investment firm which owns Poundstretcher, Poundland’s US rival.
Poundland bosses weigh bid
Poundland’s management is also preparing a bid to take over the retailer, it is understood. Their proposal is being led by Andy Bond, a former Asda boss who ran Poundland from 2016 before becoming Pepco’s chief executive.
Though the deadline set by A&M has passed late bids may yet be considered, with bosses understood to still be negotiating with an unnamed financial backer about the management buyout.
A&M is rushing to complete Poundland’s sale before the fourth quarter of this year, in a bid to prevent uncertainty around the firm’s future from impacting its trading during the crucial lead-up to Christmas.
Poundland’s sale process has prompted one insurer to pull cover for a number of the retailer’s suppliers, in a move which could cause problems with its supply of goods.
Poundland has faced a difficult period in recent years, which its current owners have blamed on a challenging economic environment and a drastic restructuring.
The firm fell to an £85m pre-tax loss in the year to September, nearly doubling its £45m shortfall in the prior year. The group’s sales slipped 12 per cent to £1.5bn.
But Poundland said last week that its turnaround is gathering momentum. The retailer has seen 3.3 per like-for-like sales growth in the last three months and is on track to beat last year’s earnings by £80m.
Barry Williams, the retailer’s managing director, said: “Thanks to the amazing efforts of our colleagues and suppliers, our return to growth is the clearest signal yet that we’re getting back to be the kind of business that our customers want us to be.”
Gordon Brothers and A&M declined to comment.