WHSmith revises terms of sale of UK high street arm to Modella Capital

The deal, which was agreed in March, will see Hobbycraft owner Modella Capital rebrand WHSmith’s high street business to TGJones.

WHSmith confirmed it will receive lower proceeds from the sale than expected as a result of a reduction in cash flow due to “a more cautious outlook among stakeholders” following the change of ownership as well as a “period of softer trading”.

In a statement published to the London Stock Exchange today, WHSmith noted revised sale value terms which will result in gross cash proceeds for the business of up to £40m, down from the previous announcement of £52m of gross cash proceeds.

WHSmith added that transaction and separation costs remain unchanged at £27m.

WHSmith said in a statement: “This transaction is consistent with the group’s strategic focus on travel retail and creates a pure play global travel retailer which is well positioned to capture the substantial global growth opportunities in its key markets and drive enhanced shareholder value.

“Modella has recently sought amendments to the construct of the transaction. Having reflected carefully on the options and alternatives and, in particular, the value to the group and its shareholders of ensuring a successful completion of the transaction, the group entered into negotiations to establish revised terms for the transaction given the original agreement was no longer deliverable.”

The retailer added that as it enters the peak summer trading period, WHSmith’s travel division is continuing to trade “in line with market expectations”.