25th Aug 2015 06:35
LONDON (Alliance News) - The UK Competition and Markets Authority on Tuesday said it has provisionally cleared the acquisition of 99p Stores Ltd by Poundland Group PLC.
Earlier this year, Poundland agreed a GBP55 million cash and shares deal to buy its smaller - and slightly keener priced - rival 99p Stores, paying GBP47.5 million in cash and a further GBP7.5 million in shares.
In April, the CMA referred the acquisition for an in-depth phase 2 investigation following an initial investigation which found a realistic prospect that the merger would result in a substantial lessening of competition in certain areas through a possible reduction in quality, fewer promotions or closure of stores.
However, the CMA on Tuesday said that the Inquiry Group of independent panel members examining the merger found that it would not be expected to result in a substantial lessening of competition, and that Poundland would not have an incentive to reduce the quality of its offering locally as there will only be a small overall increase in the proportion of areas in which Poundland faces no competitors.
At a national level, the Inquiry Group found that Poundland competes with a number of retailers across the local areas in which it operates and only a third of Poundland's stores face competition from 99p.
"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," said Philip Marsden, chair of the Inquiry Group at the CMA.
"We have also seen in recent years the big four supermarkets engaging in intense price competition, some of which involving the promotion of GBP1 products. On the basis of the evidence to date, we do not think customers will be worse off from the merger," he added.
"We welcome the CMA's provisional clearance of our acquisition of 99p Stores and we look forward to a satisfactory conclusion to its phase 2 review. We continue to believe that the acquisition of 99p will be great for customers and for shareholders alike," Poundland Chief Executive Jim McCarthy said in a separate statement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
PLND.L