Poundland suitors tussle to buy £30m discount retailer

Several bidders will submit offers for Poundland on Friday as the owners seek £30 million for the discount retailer they purchased for just £1. Multiple parties are anticipated to present their bids to Gordon Brothers, the US investment firm that owns Poundland, ahead of the Christmas trading period. The expected bids could encompass a substantial portion, if not all, of Poundland's 600 stores, according to a source familiar with the process.

Gordon Brothers is requesting £30 million to cover a shareholder loan inherited from the retailer's previous owners, Pepco. Most potential buyers have not expressed concerns about funding this loan. Modella Capital, a Mayfair-based private equity firm that acquired WH Smith's former high street stores, is among the interested parties.

Fortress, a US private equity firm that owns US discount chain Poundstretcher, has also been in negotiations to submit a bid, as reported by the Financial Times. Earlier this week, City AM reported that Gordon Brothers is contemplating a separate sale of Poundland's 70 Irish stores, which trade under the Dealz brand, as the firm saw significant interest in its Irish business.

Poundland is reportedly considering a management buyout (MBO) for itself as part of the sale process. The firm has appointed advisors Alvarez & Marsal to prepare a list of formal bids by the end of the month with the goal of signing a deal before the fourth quarter trading begins. Poundland has faced difficulties in recent years, resulting in a £85 million pre-tax loss and a nearly doubling of its £45 million loss from the previous year.

The retailer's sales declined by 12 percent to £1.5 billion, with directors attributing the widening loss to challenging trading conditions and a significant restructuring program. Poundland's managing director, Barry Williams, stated that the company is working on rebuilding customer trust by delivering the desired ranges and price simplicity. Gordon Brothers and Alvarez & Marsal did not provide comment on the matter.