Poundland's 99p Stores Takeover Gets Go-Ahead

Poundland's £55m takeover of rival budget retailer 99p Stores has won provisional approval from the competition watchdog.

The deal will not make customers "worse off", the Competition and Markets Authority (CMA) decided.

The acquisition is set to create a combined network of around 800 UK stores, with 99p Stores being rebranded as Poundland.

Poundland shares rose 5.3% following the announcement.

An investigation in April found a 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, a survey of 5,000 customers and an analysis of company documents and commercial data came to a different conclusion.

The CMA said "customers would not face a reduction in choice, value or lower-quality service as a result of the merger".

It found the enlarged company would still face significant competition from other value-led retailers such as B&M, Home Bargains, Wilko and Bargain Buys, along with Tesco and to a lesser extent Asda.

Philip Marsden, Chair of the CMA's inquiry group, said: "There has been a significant rise in prominence of value retailers for UK shoppers.

"Our evidence indicates that customers are primarily attracted to Poundland and 99p Stores because of their affordability and see them as good alternatives to each other.

"Nevertheless some customers can and do switch to other types of discount retail chains.

"We have also seen in recent years the Big Four supermarkets engaging in intense price competition, some of which involving the promotion of £1 products.

"On the basis of the evidence to date, we do not think customers will be worse off from the merger."