Tesco held talks over deal to buy up to 150 Poundland shops

Tesco has held talks over proposals to buy up to 150 Poundland stores amid the impending break-up of the high street discount chain.

The UK’s largest supermarket approached the chain’s owner over a possible move to buy as many as a quarter of Poundland’s UK and Ireland stores, sources with knowledge of the process have told the Press Association.

Tesco declined to comment.

It comes as Poundland bosses prepare to meet Government ministers later this week amid concerns that the retailer will be broken up despite a solvent takeover move being tabled.

Poundland filed a notice to appoint administrators last week, putting the future of its roughly 11,000 workers at risk.

The notice of intention to appoint administrators filed on Thursday gave the business 10 working days of breathing space from creditors to secure a potential rescue deal.

Advisers are still in talks with parties interested in buying the brand and swathes of stores, around two months after a sale process was launched.

Poundstretcher owner Fortress also showed its interest in purchasing a significant number of stores, understood to be as many as 250 shops.

It is understood that other grocery chains, such as Iceland and Lidl, are also in the frame to acquire some stores.

Wilko and The Range owner CDS Superstores and B&M have also expressed their interest in sites.

It comes after owner Gordon Brothers rejected a takeover offer from Irish real estate firm Martin Property Group, which management named as their preferred bidder last month.

Gordon Brothers – which only bought Poundland last year for £1 – launched a sale process for the retailer at the start of September.

Poundland currently runs around 600 stores across the UK and Ireland, including around 70 under the Irish Dealz brand.

Gordon Brothers had overseen a major turnaround programme at Poundland which had already resulted in the firm shutting more than 100 shops over the past year in an effort to shore up its finances.

However, the impending insolvency comes amid reports of increasing friction between Gordon Brothers and Poundland management.

The owners rejected the solvent takeover bid from Martin partly due to expectations that bidders stump up £30 million to cover a loan Gordon Brothers took on from its takeover last year.

The potential interest in new sites from Tesco comes amid efforts to focus on its core grocery operations in the UK and Ireland.

Last week, Tesco agreed to sell its businesses in the Czech Republic and Slovakia to Ahold Delhaize in a deal worth around £1.5 billion.