Proposed acquisition of 99p Stores Ltd

6 February 2015

POUNDLAND GROUP PLC

Proposed acquisition of 99p Stores Ltd for an enterprise value of £55 million

Poundland Group plc ("Poundland" or "the Group"), Europe's leading single price general merchandise retailer and 99p Stores Ltd ("99p Stores"), a UK value general merchandise retailer, are pleased to announce that they have signed a conditional sale and purchase agreement for Poundland to acquire 99p Stores for an enterprise value of £55 million, comprising a cash consideration of £47.5 million and the issue of new Poundland Shares with a value of £7.5m at closing ("the Acquisition").

Poundland believes that the combination of the two businesses will provide better choice, value and service for 99p Stores' customers. The proposed transaction includes 99p Stores' network of 251 stores (trading as '99p Stores' and 'Family Bargains'), which serve more than two million customers a week, as well as its warehouse and distribution centre. In the year to 1 February 2014, 99p Stores had sales of £370.4 million, Underlying EBITDA of £6.1 million, gross assets of £91.2 million and net assets of £11.2 million.

When the two businesses are fully integrated, the proposed transaction is expected to enhance earnings per share for Poundland's shareholders. *

The cash consideration of £47.5 million and the cash costs associated with the integration and restructuring of 99p Stores will be funded by an equity placing to be undertaken at or immediately prior to the closing of the Transaction and an increase in Poundland's revolving credit facilities, reflecting its focus on preserving a conservative financial profile to support the capital investment plans in its business.

The Acquisition is conditional on the approval of the Competition & Markets Authority ("CMA"). Given the size of the two companies, the CMA will review the proposed transaction and Poundland and 99p Stores have already held discussions with the CMA regarding the proposed transaction. The CMA may require Poundland to take actions or give remedies to address any impact on competition arising as a result of the proposed transaction. The CMA will commence its public consultation and review process shortly and this process is expected to take at least two months. The proposed transaction is conditional on an outcome of this CMA process that is acceptable to Poundland and to the CMA.

Whether the Acquisition is completed or not, the Board is committed to its existing proven growth strategy of store rollout in the UK & Ireland and in the further development of its trial in Spain, which could lead to further expansion in continental Europe. When combined with the Group's strong cash flow, the Board is convinced that, with or without the Acquisition, the Group is well-placed to build strongly on its proven track record and successful stock market debut.

Further announcements will be made in due course.

Commenting on the proposed transaction, Jim McCarthy, Chief Executive of Poundland, said:

"This is a good deal for both businesses and will benefit customers and shareholders. Through working together, Poundland will improve choice, value and service for 99p Stores' customers, bringing Poundland's proven know-how and range to 99p Stores. We also believe that we can improve the performance of the 99p Stores estate and generate further value for Poundland's shareholders. We look forward to working with the CMA as it undertakes its review."

There will be a conference call for analysts and investors at 9am today. The details are as follows:

Participant dial in number: +44 (0) 20 3003 2666

Password: Poundland

Replay facility available for 7 days: +44 (0) 20 3350 6902

Replay access code: 2057409#

\* This should not be construed as a profit forecast. In particular, it should not be taken to mean that Poundland Group plc's earnings per share for the year ended 27 March 2016 will be higher than for the year ended 29 March 2015.

About Poundland

Poundland plc joined the premium segment of the London Stock Market in March 2014. 

Poundland is Europe's largest single price value general merchandise retailer and winner of the 2014 Grocer Awards for Variety Discount Retailer of the Year. Nearly 600 stores have been opened in the UK, the Republic of Ireland and Spain since 1990. In the Republic of Ireland and Spain, Poundland trades under the Dealz brand. Poundland sells quality top brands and own brand products all for the single price point of £1, providing customers with amazing value every day.

Serving an average of 5 million customers every week Poundland offers an irresistible shopping experience where shoppers are guaranteed to find approximately 3,000 quality products per store and over 1,000 well-known brands, across 17 shopping categories including food and drink, health and beauty, household, gardening, DIY, Pet, Stationery, Books, DVDs and Toys. Last year, Poundland launched its first ever celebrity-endorsed range, Jane Asher's Kitchen, which has been a great success and, in April 2015, Poundland plans to launch Tommy Walsh's DIY range. This includes around 200 products, which have been over a year in development.

For more information about Poundland, please visit:

www.poundland.co.uk

www.Facebook.com/Poundland

www.twitter.com/poundland