WH Smith will disappear from the high street after a deal to sell its UK high street business to investment firm Modella Capital, owner of the arts and crafts retailer Hobbycraft, for £76m.
The move will eventually see the familiar WH Smith name replaced by the TGJones brand. The sale only affects WH Smith’s traditional storefront locations and does not include its lucrative travel retail business, which operates in airports and train stations.
The deal encompasses approximately 480 high street stores and transfers around 5,000 employees to Modella Capital. The future of the WH Smith brand itself remains secure, as it is not included in the sale.
The travel division, which has become the key focus of the group in recent years and also includes shops in hospitals, will not be changing. That makes up the bulk of its sales and profits, and has grown to more than 1,200 stores across 32 countries.
High street shops have become a “much smaller part” of the group, its boss said. WH Smith’s high street stores contribute just 15 per cent of the group’s overall profit.
Group chief executive Carl Cowling said: “As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WH Smith as we become a business exclusively focused on travel.
“As our travel business has grown, our UK high street business has become a much smaller part of the WH Smith Group. High Street is a good business; it is profitable and cash generative with an experienced and high-performing management team.
“However, given our rapid international growth, now is the right time for a new owner to take the high street business forward and for the WH Smith leadership team to focus exclusively on our travel business. I wish the High Street team every success.”
The sale to Modella Capital represents an enterprise value of £76m on a cash and debt-free basis.
Modella Capital specialises in investing in retailers. It has previously put money into chains including Paperchase and Tie Rack.
In August, it snapped up arts and crafts retailer Hobbycraft for an undisclosed sum.
The WH Smith sale follows a period of uncertainty where a number of potential buyers were believed to be in the running to snap up the historic chain.
It is understood that private equity groups Hilco and Alteri were among parties to express interest in a possible takeover, after WH Smith launched the process late last year.
