Former Poundland owner teams up to bid for Pepco

Advent International, which sold Poundland for £200m in 2010, has teamed up with two private equity firms – Hellman & Friedman and Mid Europa Partners to prepare a bid for Pepco that could value it at more than £3.8bn, according to Sky News.

The retailer, which trades under the brands Pepco and Dealz in a dozen Eastern European countries, has more than 2,700 stores in the region.

It rebranded from Pepkor Europe in September 2019 and announced it planned to open 300 stores across the twin fascias a year.

By contrast, Poundland is not planning any bricks-and-mortar expansion and will instead focus on either moving current stores to larger locations or securing rent reductions across its 840-strong store estate.

Pepco completed a long-term £422.1m refinancing last year, which chief executive Andy Bond said gave the retailer “complete financial independence” from parent company Steinhoff, which was still reeling from an accountancy scandal in 2017 and wallowing under a $10bn debt pile.

Bond wouldn’t be pressed about a possible sale, saying: “There is no pressing need that, in order to continue to build a great business, we need to get sold. It is absolutely a decision for the shareholders, if and when they do that, and it is not an imperative for management one way or the other. We can build a great business here or under different ownership.”

Sky News reported that interest from the Advent-led consortium in a takeover of Pepco “establishes a credible alternative” to the possibility of a float, rumours of which began circling in September.

It said that bids of between €4.5bn (£3.8bn) and €5bn (£4.26bn) would be needed for Pepco owner Steinhoff to truly abandon any plans for a Poundland float.