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Poundland buys 99p Stores in £55m deal

The takeover was under investigation by the Competition and Markets Authority over concerns it would have an impact on competition

You could see more Poundland stores popping up near you as the budget retail chain buys up 99p Stores.

Poundland is snapping up the rival chain for £55m, in a deal thought to comprise £47m in cash and £7.5m in new shares, and will provide Poundland with a warehouse and distribution centre.

After first announcing its intention in February, the firm has now been given the green-light to go-ahead with the merger.

The move had been put on hold while the Competition and Markets Authority launched an investigation into the deal. There were concerns the deal could reduce competition in the market but it found no evidence of this.

The new group, which will boast a network of 800 shops, will still face competition from the likes of Poundworld, B&M, Wilko, Tesco and Asda, the inquiry group concluded.

Poundland already has branches in Feltham, Uxbridge, Hounslow and Twickenham, while 99p Stores are located in West Ealing, Hayes, Southall, Hounslow, Acton, Wembley and Harrow.

Poundland chief executive Jim McCarthy claimed the moved will benefit both customers and shareholders: "We welcome the CMA's provisional clearance of our acquisition of 99p Stores.

"We continue to believe that the acquisition of 99p will be great for customers and for shareholders alike."

CMA inquiry group chair Philip Marsden said customers would not be "worse off" from the merger.

He added: "We conducted our own customer survey and examined a large amount of data to understand whether, after the merger, customers would have enough alternatives both overall and in the local areas where there is currently a Poundland store and a 99p Store.

"Both across its business and in individual areas, Poundland would continue to face competition from other value retailers so we don't currently believe customers will face a reduction in choice, value or lower-quality service as a result of the merger.

"We have also seen in recent years the Big Four supermarkets engaging in intense price competition, some of which involving the promotion of £1 products. On the basis of the evidence to date, we do not think customers will be worse off from the merger."

Anyone wishing to respond to the provisional findings should do so in writing, by no later than 5pm on September 16.

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