Barclays Private Equity eyes £200m take-over of Poundland

Barclay Private Equity has expressed an interest in a potential take-over of Poundland for about £200m. Other unnamed private equity firms are also circling the single price chain, which delivered underlying earnings of £20m last year. Its owners Advent International effectively put the 264-store chain, which sells everything for £1 or less, up for sale this month by hiring Close Brothers to advise on its strategic options. A date for first round bids is unclear.

Advent bought Poundland, which has thrived during the recession, for £50m in 2002 when it was a much smaller business. Poundland plans to open about 50 new stores over the next 12 months.

For the year to 29 March 2009, Poundland delivered a 27 per cent uplift in earnings before interest, tax, depreciation and amortisation of £20m, compared with £15.7 million the year before.

Industry sources said it could fetch a valuation of £200m, equal to ten times earnings. But a higher price tag is possible, given that Poundland is on track to increase its EBITDA in the current financial year that ends this week.

This year, numerous retailers, including the arts and craft retailer Hobbycraft and the floral clothing chain Cath Kidston have been put up for sale. Barclays Private Equity, Poundland, Close Brothers and Advent declined to comment.