Poundland has been officially sold as part of a deal parent company Pepco Group has finalised with Gordon Brothers for a nominal sum, marking a pivotal shift in the company's strategic direction.
The transaction could have major consequences for Britian's high streets and the 800 Poundland stores that are currently operating across the country.
Despite Poundland generating 33 per cent of group revenues, the business contributed merely five per cent to EBITDA before IFRS 16 adjustments.
The deal structure involves Pepco maintaining financial ties with its former subsidiary through various lending arrangements. A secured loan of £30million from Pepco to Poundland will remain in place, alongside certain unsecured loans between the two entities.
Poundland has been sold for a "nominal" price to Gordon Brothers
POUNDLANDAdditionally, an overdraft facility of up to £30million will be established between Pepco Group and Poundland following the completion of the proposed restructuring.
These financial arrangements will support the transition whilst allowing Pepco to retain some economic interest in the business.
Pepco Group also anticipates securing a minority stake in Poundland, pending High Court approval of the restructuring plans.
Stephan Borchert, Pepco Group CEO, described the agreement as "an important milestone in our strategic plan to move away from FMCG and focus predominantly on Pepco, our higher margin clothing and general merchandise business".
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He emphasised that the transaction would "strongly support our accelerated value creation programme by simplifying the Group and focusing on our successful Pepco business."
Borchert expressed confidence that Pepco possesses "the right foundations to be one of Europe's most successful discount retailers, delivering customer satisfaction, profitable growth and shareholder value."
The CEO acknowledged Poundland's significance in UK retail, thanking the team for their contributions and wishing Barry Williams and his colleagues success under the new ownership structure.
Poundland, which operates over 800 stores across the UK, Isle of Man and Ireland, employs approximately 16,000 staff. All stores, employees, assets and liabilities will transfer to Gordon Brothers' ownership.
Britain's high streets have been hit by a wave of store and restaurant chain closures PABarry Williams, currently Managing Director of Poundland, will continue to lead the business under its new ownership.
The company will maintain its Poundland branding in the UK and continue trading as Dealz in the Isle of Man and Republic of Ireland.
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Poundland is up for sale, potentially putting hundreds of locations at risk GETTY Barry Williams, Chief Executive Officer of Poundland, said: "We welcome Gordon Brothers as we focus on returning Poundland to its core heritage category strengths and place as an essential business to U.K. households.
"We look forward to working with our supplier base to ensure we continue providing exceptional value to budget-conscious consumers in the U.K."
Mark Newton-Jones, Head of Europe, the Middle East and Africa at Gordon Brothers, added: " We are delighted to provide Barry Williams and his management team with the financing to support the substantial turnaround of this iconic retailer.
"We believe Poundland is an essential retailer serving U.K. consumers and plays an important role on the High Street.”
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