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TPG acquires majority stake in Poundworld

Poundworld store

The discount boom in the UK retail market is expected to accelerate as US private equity behemoth TPG closed in on the £150m acquisition of Poundworld on Thursday, with plans to expand the store footprint across the country.

A cash and shares deal for the Yorkshire-based company, which was founded by market trader Chris Edwards, was expected to be confirmed on Thursday afternoon, according to the Financial Times.

With nearly 280 shops, Poundworld competes for the title of second largest single-price discount retailer in the UK with fierce rivals Poundland and 99p Stores, which are in the process of merging. Poundworld also owns the Bargain Buys chain of 50 sites around the UK.

"We see the continuing rise and evolution of the value retailer as an exciting change in the UK retail landscape," said Abel Halpern, partner at TPG, which plans to invest in expanding the store footprint across the UK.

In July last year, Poundworld announced plans to create more than 4,000 jobs by opening another 150 stores over the next three years.

Edwards senior, whose son Christoper runs the group, said: "Still, there is so much more for us to achieve."

The deal follows Poundland's £55m bid for rival 99p Stores, which is undergoing an investigation by the Competition & Markets Authority.

The value retail sector, including the discount supermarekts Aldi and Lidl, as well as the frozen food specialists Iceland and Farmfoods and the pound shop chains, including Poundworld, opened 1,367 stores over the past five years, according to the Local Data Company.

Broker Shore Capital, as it questioned the need for the CMA probe into its client Poundland, recently hailed the growing breadth of this subsector.

"We believe that the discount channel is extremely dynamic and competitive and that both the general merchandise and fast moving consumer goods elements of the market in the UK have extensive and, if anything, growing choice with the expansion and evolution of grocery limited assortment retailers (LADs) such as Aldi, Lidl and Netto, and general merchandise high street value retailers (HSVRs) such as B&M Stores, Home Bargains, Poundstretcher, Poundworld and Wilko."

Several major health & beauty specialists, such as Savers and Superdrug, also operate in the discount space and across all these categories sit the value based supermarkets, Asda, Tesco and Morrison Supermarkets, as well as many thousands of individual general merchandise and variety stores across the UK.

Source : Sharecast.com
www.sharecast.com/news/private-equity-giant-tpg-nears-poundworld-takeover/22791988.html

15 May 2015

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