Bargain chain Poundland’s £55million acquisition of high street rival 99p Stores has been given the green light by the Competition and Market Authority.
The CMA concluded that the merger, which was first announced in February and will create a network of over 800 stores, would not result in a “substantial lessening of competition”.
Having made that decision, the CME also said customers would not face a reduction in choice, value or quality of service as a result.
It said indicated that with Poundworld, the companies are each other’s closest competitors, but after the merger each will still face competition from other value retailers such as B&M, Home Bargains, Wilko and Bargain Buys, along with Tesco and, to an extent, Asda.
The enquiry group’s assessment found that Poundland would not have an incentive to reduce the quality of its offering, either at the local or at the national level.
It confirmed the CMA’s provisional findings into the merger back in August.
Poundland, which will pay £47.5m in cash and issue £7.5m in new shares, welcomed the decision and said the merger would be completed by the end of September.
It will reveal further information on its plans for 99p stores in conjunction with its interim results in November.
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Chief executive Jim McCarthy said: “We believe that the acquisition of 99p Stores will be great for both customers and for shareholders and we will now move to completion by the end of the month.”
Poundland currently has 588 shops in the UK and Ireland, where it trades under the Dealz name, and has been one of the high streets biggest winners during the recession as cash-strapped shoppers snapped up their discounted goods.
99p Stores has 251 locations, which are expected to be renamed Poundland as part of the deal. As a result, it is also expected that prices in those branches will rise by 1p to £1.
Poundland, which also recently launched an online service, has said that it wants to grow to have as many as 1,500 UK stores within the next five years. It also has seven stores in Spain operating under the Dealz brand.
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