Poundland U-Turns On 99p Stores Scrutiny

Poundland has lifted its threat to walk away from its proposed takeover of rival 99p Stores, saying it is now happy for the deal to face regulatory scrutiny.

The discount retailer announced in early April that it proposed to spend £55m on acquiring all 251 stores under the 99p Stores brand, confirming goods would rise in value by 1p to match Poundland's offering.

But the Competition and Markets Authority (CMA) said the deal could result in a substantial weakening of competition and would be subject to a further investigation in the absence of undertakings, such as selling some stores.

Poundland, which had refused to offer any remedies to the CMA and warned it may scrap its bid, said today it was happy to proceed with the Phase II regulatory review.

Its chief executive, Jim McCarthy, said: "We look forward to working with the CMA in Phase II in order to ensure that we can deliver an improvement in choice, value and service for 99p Stores' customers."

Poundland has expanded quickly as it bids to capitalise on the entrenched recession-era growth in discount shopping, which has taken sales from Britain's "big four" supermarkets.

It recently reported annual revenues of £1bn for the first time.

The chain trades from 547 UK stores and 41 in Ireland (Other OTC: IRLD - news) under the Dealz brand.