New WH Smith owner Modella seeks to add Poundland to retail empire
The little-known investor cutting a swathe through the British high street has made it onto a shortlist of bidders vying to buy Poundland, the struggling discounter.
Sky News has learnt that Modella is among a handful of bidders notified in recent days that they have made it through to a second stage of the auction of Poundland.
Its progress in the sale process raises the prospect of Modella taking ownership of its fourth major British retailer in less than nine months.
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The investment firm already owns Hobbycraft and The Original Factory Shop, where it has in recent weeks launched company voluntary arrangements - court-sanctioned restructuring deals which allow it to close loss-making stores and slash rent payments.
Modella has also agreed to buy WH Smith's historic high street chain and rebrand it under the name TG Jones.
That deal has yet to close, and Sky News reported at the weekend that Modella will effectively be prohibited from launching a CVA there for at least a year under the terms of its deal with WH Smith.
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Among the other suitors for Poundland are Endless, the turnaround investor, and Hilco Capital, the new owner of Lakeland.
Poundland has been put up for sale by Pepco Group, its Warsaw-listed owner, amid mounting losses and a struggle to turn the company around.
Pepco confirmed in March that it planned to explore a sale of the business, with Teneo hired to advise on an auction.
Last year, Poundland, which employs about 18,000 people, recorded roughly €2bn of sales.
Earlier this year, Pepco, which also trades as Pepco and Dealz in Europe, said Poundland had seen a like-for-like sales slump of 7.3% during the Christmas trading period.
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In an accompanying trading statement, Pepco said that Poundland had suffered "a more difficult sales environment and consumer backdrop in the UK, alongside margin pressure and an increasingly higher operating cost environment".
Recent tax hikes announced by Rachel Reeves, the chancellor, in last autumn's Budget have also increased the financial pressure on high street retailers.
Modella declined to comment on its interest in Poundland.
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