Tesco in talks to buy up to 150 Poundland shops amid discount chain’s administration

Discount retailer faces administration with around 11,000 jobs at risk

Tesco has entered into discussions over a potential acquisition of up to 150 Poundland stores, as the struggling high street discount retailer faces an imminent break up.

Britain’s biggest supermarket chain approached Poundland’s parent company about purchasing as many as a quarter of its UK and Ireland outlets, according to sources familiar with the matter who spoke to the Press Association. Tesco declined to comment.

The development comes as Poundland’s senior management prepare to meet Government ministers later this week, amid growing concerns that the retailer will be dismantled despite a solvent takeover bid having been put forward.

Poundland filed a notice of intention to appoint administrators last week, placing the livelihoods of approximately 11,000 employees in jeopardy.

The notice of intention to appoint administrators, filed on Thursday, granted the business 10 working days of protection from creditors in order to secure a potential rescue deal.

Advisers remain in active discussions with parties interested in acquiring the brand and a significant number of stores, roughly two months after a formal sale process was launched.

Poundstretcher owner Fortress has also signalled its interest in purchasing a substantial number of stores, understood to be as many as 250 outlets.

It is further understood that other grocery retailers, including Iceland and Lidl, are also being considered as potential acquirers of certain stores.

Wilko and The Range owner CDS Superstores, along with B&M, have likewise registered their interest in a number of sites. The development follows owner Gordon Brothers’ rejection of a takeover proposal from Irish real estate firm Martin Property Group, which management had identified as their preferred bidder last month.

Gordon Brothers – which acquired Poundland only last year for £1 – initiated a sales process for the retailer at the beginning of September.

Poundland presently operates approximately 600 outlets across the UK and Ireland, including roughly 70 trading under the Irish Dealz brand.

Gordon Brothers had been overseeing a substantial restructuring programme at Poundland which had already led to the company closing more than 100 locations over the past year in a bid to strengthen its financial position.

Nevertheless, the looming insolvency arrives amidst reports of growing tensions between Gordon Brothers and Poundland’s management team.

The owners turned down the solvent acquisition offer from Martin partly owing to demands that prospective buyers provide £30 million to settle a loan Gordon Brothers assumed from its takeover last year.

The potential appetite for new premises from Tesco emerges as part of efforts to concentrate on its primary grocery operations across the UK and Ireland.

Last week, Tesco agreed to sell its Czech Republic and Slovakia operations to Ahold Delhaize in a transaction valued at approximately £1.5 billion.