British discount retailer Poundland (LON:PLND) is raising about £50mln to bankroll its £55mln purchase of rival 99p Stores.
Poundland is placing shares worth 1p each with institutional investors to help it fund the deal, which was cleared by UK competition authorities on September 18.
JP Morgan Securities has been appointed sole bookrunner and Shore Capital Stockbrokers is acting as co-lead manager for the placing.
Poundland says the deal, which should complete on September 28, will increase its store count by 40% by adding 251 shops.
It will immediately start providing distribution and other support to 99p outlets to make the most of the important trading period between Halloween and Christmas.
The group then plans to focus on converting 99p Stores outlets to the Poundland brand and hopes to have the majority of them done within the next 12 months.
A spokesman said: "We expect significant benefits from converting 99p Stores to Poundland."