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Warburg Pincus Buying UK Retailer Poundland

LONDON (Reuters) – Warburg Pincus is buying British discount retailer Poundland from fellow private equity company Advent International in a deal one person familiar with the process said was worth about 200 million pounds ($305 million).

Warburg Pincus said on Tuesday it was acquiring a majority stake with the management of Poundland, led by Chief Executive Jim McCarthy, retaining a minority shareholding and continuing to run the business, which sells over 3,000 items at the single price of 1 pound.

Neither Warburg Pincus or Advent disclosed the value of the transaction.

The deal adds to a flurry of private equity transactions in the British retail sector in recent months.

Last month Advent purchased British sofa retailer DFS for about 500 million pounds, while Bridgepoint acquired art and craft retailer HobbyCraft for about 1OO million pounds.

In January Kohlberg Kravis Roberts bought Pets at Home for about 955 million pounds.

Warburg Pincus said Poundland was forecast to generate revenue in excess of 700 million pounds in 2011 from a UK value market estimated to be worth 24 billion pounds.

Poundland, which last year sold 185 million batteries, 4 million bars of Toblerone and 500,000 garden gnomes, currently trades from about 260 stores, employing over 7,000 people, and in January said it would open a further 50 stores in 2010/11.

McCarthy said the retailer, which thrived through the recession as cash-strapped shoppers sought value, would accelerate its growth plans under Warburg Pincus’ ownership. (Reporting by James Davey, Editing by Mark Potter)