Bidder for WH Smith loses Poundland auction amid financial struggles of discount chain
Investment Firm Hilco and Gordon Brothers in the Running for Poundland Purchase
Following the agreement to acquire WH Smith's high street operations, the investment firm responsible has been eliminated from the bid for struggling discounter Poundland. Industry sources report that Pepco Group, Poundland's owner, has narrowed the potential buyers down to two rivals - Hilco, a company with a past affiliation with HMV and Homebase, and Gordon Brothers, who were previously at the helm of Laura Ashley.
A Pepco insider revealed Friday that Hilco and Gordon Brothers are currently in a two-way race to acquire the chain, with a decision on a preferred bidder expected within the coming days. Teneo advisers have been assisting with the Poundland auction.
Modella Capital, another initial bidder, is said to have withdrawn from the process. If a deal is reached with either of the remaining firms, they would likely be required to repay around £30 million of debt owed to Pepco.
UK-based Poundland employs over 15,000 people across an estate encompassing more than 800 stores in the UK and Ireland. Industry analysts predict that a prospective buyer would likely earmark around 100 stores for closure due to their subpar performance. latest Government tax hikes, such as those announced by Chancellor Rachel Reeves in the Autumn Budget, have added to the financial strain faced by high street retailers.
In recent months, retail chains including Lakeland and The Original Factory Shop have undergone changes of ownership amidst challenging circumstances. None of the parties involved in the Poundland bidding process have commented on the proceedings.
Enrichment Data Note:As of the ongoing negotiations, Hilco and Gordon Brothers are in advanced consideration for the potential purchase, with Gordon Brothers reportedly being "in pole position" to acquire the business. However, it has been clarified that Gordon Brothers does not have preferential status, allowing for other bidders to potentially emerge. The acquisition process is progressing, and a final deal is anticipated during this financial year.
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Sources:[1] - BBC News[5] - Sky News[Unattributed] - The Guardian, Telegraph, Mirror, etc.
Given the ongoing negotiations, Hilco and Gordon Brothers are both contenders for acquiring Poundland, with Gordon Brothers reportedly having a strong position in the race. However, this doesn't necessarily guarantee Gordon Brothers preferential status, as other potential bidders may still emerge.
In the industry, this potential acquisition of Poundland is happening amidst challenging circumstances, such as the latest Government tax hikes and the ongoing US-EU trade war that is causing fears of a trade war. These factors, along with the decrease in energy costs announced by Ofgem, are significant for various businesses, especially high street retailers.
