Poundland cautions on profit as launches 50 mln pound placing

(Adds detail, broker comment)

LONDON, Sept 24 (Reuters) - British single price retailer Poundland on Thursday launched a 50 million pound ($76.3 million) share placement to fund its purchase of smaller rival 99p Stores and cautioned that first-half profit would fall short of last year's level.

The 55 million pound acquisition of the 251-store 99p Stores, announced in February, was cleared by Britain's competition regulator last week and Poundland expects to complete the acquisition on Sept. 28.

Shares (Berlin: DI6.BE - news) in Poundland, which listed at 300 pence in March last year, fell up to 5.9 percent after the company also warned that "indications are that 99p Stores' financial position has weakened somewhat since our original due diligence".

Poundland said this finding did not impact the strategic rationale for the deal, nor its plans or the potential synergies it has identified.

After the deal completes Poundland plans to support 99p Stores during the most important trading quarter from Halloween through to Christmas, after which it will focus on converting the stores to the Poundland formula.

Poundland said it expects group profit before tax for the year to end-March 2016 for the core business to be in line with the market consensus, which is 46.5 million pounds according to Reuters data.

However, it expects pretax profit for the first half of the year to be lower than the 12.6 million pounds made in the first half of 2014-15, reflecting the cost of opening 55 stores compared with 34 in the same period last year.

In June, Poundland had flagged tough comparative trading numbers in the first half, the impact of the euro and softer sales comparables in the second half.

House broker Shore Capital expects first-half profit of 9 million pounds.

Stripping out the impact of currency changes, sales for the 14 weeks to Sept. 20, the bulk of Poundland's fiscal second quarter, were up 6.6 percent.

However, sales at stores open more than a year for the 25 weeks to Sept. 20 fell 2.9 percent.

Poundland said JP Morgan has been appointed sole bookrunner for the share placing, with Shore Capital as co-lead manager.

Shares in Poundland were down 14.3 pence at 295 pence at 0752 GMT, valuing the business at 744 million pounds. ($1 = 0.6551 pounds) (Reporting by James Davey; editing by Paul Sandle and David Clarke (Toronto: CKI.TO - news) )