WH Smith knocks down price of high street stores to close sale
WH Smith has been forced to reduce its offer price for its high street arm by £ 12m amid lower-than-expected cash flow in the period leading up to the sale.
The move will see WH Smith become a pure-play travel retailer, and its high street arm will be rebranded to TG Jones.
The Swindon-headquartered company expects gross cash proceeds from the deal to be £40m, against the £52m announced in March.
It said the future of its high street arm under a change of ownership has led to a “more cautious outlook amongst stakeholders”.
Its share price dropped by around 11 per cent in the month after the deal was announced.
The company added that this, combined with “a period of softer trading”, has resulted in lower cash flow and led to Modella seeking amendments to the deal.
WH Smith was then forced to “establish revised terms” for the deal with Modella, given that the original agreement was “no longer deliverable”.
It expects gross cash proceeds of up to £40m, with £10m expected in FY25, up to £20m in FY26 and £10m of deferred tax assets.
A strategic shift for WH Smith
The sale of its high street arm marks a strategic shift for WH Smith as it moves to focus on its expanding travel retail operations.
Throughout the last decade, WH Smith has focused almost entirely on its travel retail business, which operates in airports, train stations and hospitals.
With the travel retail business increasingly profitable, the high street business now accounts for just 15 per cent of WH Smith’s profit annually.
All of the approximately 480 stores and 5,000 staff working for the high street businesses will move under Modella Capital’s ownership as part of the deal.