Poundland bosses are in talks over a management buyout of the discount chain, people close to the process have confirmed.
A team formed by Poundland leadership and Andy Bond, the former CEO of Asda and Pepco Group, is in advance talks over a management buyout funded by one of the bidders in the auction for Poundland.
A deal would result in the MBO team holding an equity stake in Poundland and existing management including MD Barry Williams retained. The unnamed bidder would be the chain’s new owner.
The bidder is said to be highly credibly, having already demonstrated the ability to fund the buyout. It is neither Modella Capital nor Poundstretcher owner Fortress, the two private equity players previously reported to have been circling the retailer.
The prospect of an MBO should allay concerns for Poundland’s 12,000 staff over the possibility of an administration – a fear that was heightened on Friday when the Financial Times reported owner Gordon Brothers was demanding £30m, a price that could deter some interested parties.
The MBO would allow Williams to continue leading the business with the support of Bond. Poundland’s former own Pepco Group, which retains a minority stake in the retailer, is understood to be supportive of the solution.
The sale process was launched by Alvarez & Marsal on 2 September and the first round of bids finished yesterday. Subsequent MBO talks are believed to be motivated by a desire to create a solvent solution and avert any possibility of Poundland going the same way as a string of retailers to have collapsed this year, such as The Original Factory Shop and Claire’s.
Poundland posted a return to growth in its latest quarterly trading update on Friday, with like for like sales up by 6.4% on an adjusted basis in the its fourth quarter, or by 3.3% on an unadjusted basis. Poundland said profitability was on a “strongly improving trajectory” with EBITDA expected to be around £80m higher than last year.
“Thanks to the amazing efforts of our colleagues and suppliers, our return to growth is the clearest signal yet that we’re getting back to be the kind of business that our customers want us to be,” said Williams in the trading update.
“With the revamp of all our ranges across grocery, general merchandise and clothing complete, we look forward to the Christmas period with real momentum and confidence.”
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