Poundstretcher owner withdraws rescue bid for rival Poundland

The owner of Poundstretcher has withdrawn its takeover bid for rival Poundland and is instead targeting an offer for hundreds of its stores – a move which will fuel fears of an imminent insolvency filing.

Sky News has learnt that Fortress Investment Group has amended its offer to Alvarez & Marsal, the professional services firm advising Poundland's owner, Gordon Brothers, in recent days.

Instead of attempting to acquire the whole business as originally envisaged, competition concerns have prompted Fortress to submit a revised bid for fewer than half of Poundland's roughly 530 UK shops, insiders said on Tuesday.

One insider said the number of shops that Poundstretcher's owner was now interested in was between 200 and 250.

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If chosen by Gordon Brothers, such a transaction would be expected to take place by way of a pre-pack administration, they added.

The prospect of an insolvency process ahead of the crucial Halloween and Christmas trading periods was disclosed by Sky News at the weekend - and exacerbated by a statement from the shopworkers' union, Usdaw, which claimed that an administration filing could come as early as Tuesday.

Just one bidder is said to be pursuing a solvent bid for Poundland, in the form of Ireland's Martin Property Group, which is the preferred partner of Poundland's management team.

Others are interested in a smaller number of stores, raising the possibility of a break-up of the business.

Modella Capital, the prolific retail investor which owns TGJones, WHSmith's former high street chain, has also made an offer for the whole business, but it was unclear on Tuesday whether it had a realistic prospect of success.

Even after a store closure programme triggered by its sale last year, Poundland remains one of the biggest general merchandise retailers in the UK, employing nearly 12,000 people.

A substantial number of those jobs would be at risk if Poundland collapsed into insolvency proceedings.

The company also has a presence in the Irish retail market, taking its total number of outlets to between 550 and 600.

Warsaw-listed Pepco Group, which sold Poundland to Gordon Brothers last year, retains a minority stake in Poundland.

The chain has struggled for years as a consequence of rampant inflation and a diversification of its product mix which drove shoppers to rival chains.

Martin Property Group is said to have committed to retaining Poundland's store footprint and workforce.

It is also understood to have told A&M that it would retain a distribution centre located in prime minister Andy Burnham's Makerfield constituency.

Its offer would involve paying a nominal sum of as little as a pound for the company's equity, with Martin Property Group also committing to repay the balance of existing loans as well as injecting millions of pounds into Poundland to fund its turnaround plan.

Gordon Brothers is also reportedly demanding full repayment of a £30m shareholder loan for which it paid just £1 as part of a deal with any buyer of the business.

Executives at Gordon Brothers, including the former Mothercare boss Mark Newton-Jones and Frank Morton, its chief investment officer, are hoping to reach a decision on a preferred route for the business as early as next week.

Sky News reported at the start of the process that Gordon Brothers was keen to agree a deal by the end of October.

Sales figures released in recent weeks suggest that Poundland's performance has begun to improve since the Gordon Brothers deal, with a new store format said to have produced positive results.

The auction of Poundland is nearing a conclusion just weeks before the chancellor, John Healey, presents his first Budget, with retailers among those seeking relief from further cost pressure from the Treasury.

A group of executives from supermarkets and hospitality businesses met Mr Healey on Tuesday to plead the industry's case.

Fortress, Gordon Brothers and A&M declined to comment.

(c) Sky News 2026: Poundstretcher owner withdraws rescue bid for rival Poundland