WH Smith cuts sale price of high street business by £12m
The company closed the sale of its 230-year-old British high street business to the investment company Modella Capital on Monday, and revealed that the sale value terms have been revised down.
WH Smith will now receive gross cash proceeds of up to £40m, not the £52m expected in March when it agreed to sell its 480 high street stores to Modella, which also owns Hobbycraft.
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Shares in WH Smith fell 5% in morning trading, after the news of the revised deal terms.
WH Smith told the City that the original agreement was 'no longer deliverable'. It said 'the future of the high street business under a change of ownership has led to a more cautious outlook among stakeholders,' and also blamed 'a period of softer trading' for the reduced sale price.
'It is not too surprising that Modella Capital got slightly cold feet about the deal it agreed with WH Smith back in March to buy the struggling high street business (soon to be called TG Jones), but at least it didn't pull out completely,' said the retail analyst Nick Bubb.
While the high street business, which employs about 5,000 people, will be rebranded as TGJones, WH Smith is retaining its brand for its travel shops in railway stations, airports and hospitals.
Modella revised down its purchase price at a time when concerns about the health of UK retail are rising. The latest official data showed retail sales volumes dropped at their fastest rate since December 2023 in May, down 2.7% month on month and 1.3% lower than a year ago. That decline was driven by a drop in sales volumes at food retailers, the Office for National Statistics said.
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