Founder Aziz Tayub had previously wanted to float Poundstretcher, which has 320 plus stores across the country and employs around 4,000 people, on the London Stock Exchange.
Former Morrisons executive Andy Atkinson is expected to become chief executive of Poundland when the deal is completed.
Poundstretcher and rivals such as Poundland and B&M Bargains have grown rapidly since the late 2000s, first in response to the recession that followed the global financial crisis and then the cost-of-living squeeze.
At its first half trading update, Poundland owner Pepco said that the British discounter’s first half revenues had increased 3.7% to £1.1billion, despite a weak performance from its clothing and general merchandise ranges.
It blamed the weak performance of clothing and general merchandise on its decision to swich Poundland’s offerings of both to new Pepco-sourced ranges.
Poundland closed 40 stores over the six months to the end of March, but opened 81. Of the new stores that it opened, 56 were former Wilko stores.
Yesterday also saw Pepco appoint Stephan Borchert as its new chief executive. Borchert is best known for heading GrandVision, the global opticians giant that owns Vision Express.
