Tesco has held talks over buying up to 150 Poundland stores as the discount chain faces a potential break-up, according to reports.
The UK's largest supermarket chain reportedly approached Poundland's owner, Gordon Brothers, about acquiring a quarter of its UK and Ireland stores.
Poundland bosses, meanwhile, are set to meet with Government ministers amid concerns the retailer may be broken up, despite a takeover offer being on the table.
The company recently filed a notice to appoint administrators, putting the future of its roughly 11,000 employees at risk.
This notice gives the business 10 working days of protection from creditors to secure a potential rescue deal.
Advisers continue to engage with parties interested in purchasing the brand and many of its stores, around two months after a sale process commenced.
Among those interested is the owner of Poundstretcher, Fortress, which is considering buying as many as 250 stores.
Other grocery chains, including Iceland and Lidl, have also shown interest in acquiring some stores.
Other interested parties include Wilko, The Range owner CDS Superstores, and B&M.
This follows Gordon Brothers' rejection of a takeover offer from Irish real estate firm Martin Property Group, which was named as the management's preferred bidder last month.
Gordon Brothers, which purchased Poundland last year for £1, launched a sale process for the retailer at the start of September.
Poundland currently operates around 600 stores across the UK and Ireland, including about 70 under the Irish Dealz brand.
Gordon Brothers had managed a major turnaround programme at Poundland, resulting in over 100 shops closing over the past year in an effort to stabilise its finances.
However, impending insolvency looms amid reports of growing tension between Gordon Brothers and Poundland management.
The owners rejected the solvent takeover bid from Martin partly due to expectations that bidders cover a £30 million loan Gordon Brothers took on from its takeover last year.
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Tesco's interest in new sites comes as part of its efforts to concentrate on its core grocery operations in the UK and Ireland.
Recently, Tesco agreed to sell its businesses in the Czech Republic and Slovakia to Ahold Delhaize in a deal worth around £1.5 billion.
Newsquest has contacted Tesco for a comment.
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