Poundland’s owners are resisting a takeover bid from an Irish property firm over fears it does not have the cash to sustain the company and could put its thousands of employees at risk.
The leading bidder to take over the struggling discount retailer, Martin Property Group (MPG), is refusing to pay for the company up front, prompting fears of job losses under its ownership, sources said.
MPG, which recently bought National Car Parks (NCP) out of administration, has submitted a formal bid to buy the company from Gordon Brothers, the US investment firm.
MPG had been the frontrunner to snap up Poundland but progress towards a deal has stalled, prompting three new directors – who had been drafted in to accelerate the sale process – to consider resigning.
The potential departure of Andrew Kirkpatrick, Stephen Welch and Dominic Young from Poundland’s board, first reported by Sky News, has thrown the future of one of Britain’s best-known high street chains into doubt.
Poundland’s board had already publicly endorsed Martin Property Group’s offer for the company and the trio of new directors are said to be frustrated by Gordon Brothers’ refusal to accept it.
But City AM understands that MPG is refusing to offer full up-front payment for a £30m loan which Poundland’s owners have decided must be covered as part of any deal.
Gordon Brothers is concerned that Martin Property Group’s inability to stump up for the loan suggests that Poundland could collapse into insolvency soon after they take over, putting the jobs of its 12,000 workers at risk.
Martin Property Group did not respond to a request for comment.
Rival retailers circle
While the NCP-owner was the frontrunner to inherit the entire Poundland business, a number of retailers have tabled bids for significant parts of the company’s sprawling 600-store estate.
These bidders have committed to taking on the staff at all the stores they acquire, according to Transfer of Undertakings (TUPE) rules, which aim to protect employees when a business changes hands.
The uncertain future of Poundland’s employees had already prompted stark warnings from Usdaw, the retail union, who branded Gordon Brothers an “absolute disgrace” and warned the retailer was teetering on the brink of administration.
Last week, union officials put the government on alert over Poundland’s potential collapse, the Telegraph reported. They said the company could collapse hours before John Healey sets out his Budget on Wednesday and undermine his commitment to support British jobs.
The sale of Poundland has attracted significant interest from the UK’s high street heavyweights, with retailers including Lidl, Iceland, The Range, B&M and Poundstretcher hoping to snap up stores if the company is broken up.
A spokesperson for Gordon Brothers said: “While Martin Property Group had been identified as the preferred bidder by Poundland’s management team, attention must now turn to other active bids.
“As well as interest from buyers for the whole business, the sale process has also surfaced a number of formal and indicative offers for significant viable parts of the business from established retail operators. These options will now be objectively evaluated, with a view to minimising uncertainty for Poundland’s people and all relevant stakeholders.”