POUNDLAND is facing an in-depth competition probe into its £55 million takeover of rival 99p Stores, which could see it having to sell off a clutch of outlets.

The planned merger, announced in February, would create a network of 800 shops but an initial investigation by the Competition and Markets Authority found this could mean “substantial lessening of competition in 80 local areas where the companies overlap” and 12 where they would compete “in the near future”.

The CMA has now told Poundland that it will refer the deal for a 24-week in-depth inquiry unless “acceptable undertakings” are made by next week. In previous similar cases this has meant selling stores.

Sheldon Mills, CMA senior director of mergers, said: “After the transaction, Poundland will no longer face competition from its closest rival.”