WH Smith has completed the sale of the UK high street business after being forced to renegotiate and slash the valuation as trading at the stores continued to struggle.
The group agreed to sell the high street operation to private equity firm Modella Capital for £76m earlier this year, with the business to be rebranded as TG Jones.
However, this morning, WH Smith revealed it re-entered into negotiations with Modella to establish revised terms for the deal “given the original agreement was no longer deliverable”.
Following the original agreement and announcement of the sale, the future of the high street business under a change of ownership had led to a more cautious outlook by Modella, WH Smith added.
“This, combined with a period of softer trading, has resulted in a reduction in the ongoing cashflow of the business. Consequently, Modella has recently sought amendments to the construct of the transaction.”
Modella will now pay £10m up front, with up to £20m deferred as WH Smith and the PE firm equally share the cashflow generation of the business up to August 2026. And there will be up to an additional £10m based on the timing and realisation of certain tax assets within the high street business.
The total of up to £40m of gross proceeds compares with the original deal of £52m, with the transaction and separation costs remaining unchanged at £27m.
Following the transaction, WH Smith expected headline net debt to stand at around £425m by 31 August 2025.
As the group enters the peak summer trading period, the travel division continued to trade in line with market expectations, it said.
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