UK Retailer WH Smith (LON: SMWH) has agreed to buy US based Marshall Retail for a reported $400 million.
This takeover will strengthen WH Smith’s presence in the international travel sector and its status in the $3 billion US Airport market.
A staple firm on the UK High Street, WH Smith has made its money through sales of stationary equipment along with book sales.
The takeover will double the size of WH Smiths’s international travel business.
The deal will be financed by a combination of new debt and equity, with £155 million being raised from equity placing.
Additionally, a £200 million term loan facility will help fund the move with completion expected in the first quarter of 2020.
Donald Brown, senior investment manager at Brewin Dolphin, added: “WH Smith continues to be a tale of two businesses. Despite the challenging retail backdrop, the group is delivering strong growth at its travel division, where its 1,019 units delivered a 22 per cent rise in sales.”
As a result of this move, shares in the UK retailer have risen by 8.43% trading at 2,264p per share 17/11/2019 11:25BST.
The rise in share price brought the price to its highest since January 2018 as they look set to close in on an all time high.
Carl Cowling is set to become Chief Executive on November 1st commented “This acquisition will accelerate the growth of our international travel business and, combined with InMotion, the market-leading digital accessories airport retailer that we acquired last year, will significantly enhance our scale and growth opportunities in the US, a large and fast-growing travel retail market,”
A year ago, WH Smith paid £155 million for InMotion, a technology retailer aimed at strengthening market share and diversifying US travel operations.
Michael Wilkins Marshall Retail Group CEO was optimistic about the move saying “I feel very proud to announce that we have reached an agreement with UK based retailer, WH Smith, to acquire Marshall Retail Group. WH Smith is one of the world’s oldest retailers with close to 1,600 stores across the world.This is an incredible milestone for our business and is testament to the outstanding team at MRG. We are proud of our success, particularly our recent growth in airports, and I’m especially excited about the potential this unlocks for MRG in the years to come”
Wilkins added “We very much look forward to working with such an established and successful global business, with strong heritage, as we continue on our journey together to drive both businesses forward.“
WH Smith will benefit greatly from this move, adding 170 new locations including 59 at airports and looks to be an acqusition of consolidation for the UK Stationary Retailer.
The move by WH Smith looks set to drive its international operations and expand international brand awareness. If successful WH Smith will capture some of the US travel market.
In the retail market there have been updates to Angling Direct Plc (LON: ANG), Laura Ashley Holdings plc (LON: ALY), Dunelm Group plc (LON: DNLM), Amazon (NASDAQ: AMZN).
