Modella Capital, the investment firm behind TG Jones, has emerged as the latest potential bidder for Poundland, according to reports. The news comes just after it was announced that Poundland's owners were considering a sale of the business.
US-based investment firm Gordon Brothers only bought the discount chain in July last year for the sum of just £1. It subsequently launched a huge restructuring plan, closing down 200 of its 800 stores.
Potential buyer sounded out
Now it has been reported that Modella is being "sounded out" about an interest in the budget chain. Industry sources say the firm is yet to commit to a bid but that it's a logical buyer after buying sister company, Poland's Dealz, several months ago, reports Sky News.
A formal sale process of the UK discount chain will reportedly be "launched within weeks". The Gordon Brothers are said to have teamed up with consulting firm Alvarez and Marsal to oversee the upcoming auction.
The news of a sale comes after there were claims that Poundland had seen an "upturn" in its performance. Other potential bidders that were said to be interested included other turnaround funds, private equity firms and other industry players.
Impact on jobs and stores
It is important to note that, as of writing, no official statement has been provided by either the Gordon Brothers or TG Jones. The Daily Record has approached both firms for a comment and have yet to hear back.
If a sale does go ahead, it will cast into doubt the future of Poundland. The British discount chain currently employs around 12,000 people across its 600-strong store portfolio nationwide.
The business was last sold just over 12 months ago to the Gordon Brothers who bought it over from original owners the PepCo Group. Following a major overhaul, the business has reportedly enjoyed an improved financial performance. Alongside the closure of 200 stores, the investment firm also made several changes to Poundland's business. This included axing both its online shopping service 'Perks' loyalty scheme, while also reintroducing the popular singular pound pricing model.
Modella's retail track record
Poundland has just been one UK retailer bought over by the Gordon Brothers, as the company also purchased L.K Bennett and Radley London, with both brands also undergoing major restructurings that led to the closure of all stores.
As for Modella Capital, it is another investment firm that has been involved with numerous struggling UK retailers. This has included Hobbycraft, Claire's Accessories, Flying Tiger Copenhagen and also The Original Factory Shop. However, its most recent purchase was that of WHSmith, now operating as TG Jones following a major rebrand. The private equity firm purchased the iconic stationary brand in March 25 for a sum of £75 million, leading to the end of a 200 year era on the high street.
The rebranding to TG Jones has been met with a rocky start, as it has already had to undergo a massive restructuring process that has led to the closure of several stores across the country, alongside adjoining Post Office branches. The chain, which is said to employ around 5,000 people, has been hit with numerous factors recently. This has included consumer spending habits and higher costs, with a spokesperson previously confirming the "forced name change" had a negative impact on the brand.
Alongside making around 150 store closures, Modella Capital is also said to be launching negotiations with landlords in a bid to reduce rent costs at around 100 more stores in a bid to save the struggling business. The Daily Record has approached the Gordon Brothers and Modella Capital for a comment.
