WH Smith has this morning confirmed it has completed the sale of its UK high street business to Hobbycraft owner Modella Capital - but for £12million less than the fee agreed in March.

The sale, which was reported back in March but has now been finalised with new terms, will see the WH Smith name disappear from high streets to be replaced by TGJones.

In March it was reported the sale would generate £52million in gross cash proceeds, but this has now dropped to a maximum of £40million.

The announcement from WH Smith this morning stated: "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.

"Following the agreement and announcement of the sale, the future of the High Street business under a change of ownership has led to a more cautious outlook amongst stakeholders. This, combined with a period of softer trading, has resulted in a reduction in the ongoing cash flow of the business. Consequently, 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 revised sale value terms are:

  • Up-front consideration of £10million received at completion
  • Up to £20million of deferred consideration whereby WHSmith and Modella equally share in the cash flow generation of the business to August 2026
  • Up to £10million of additional proceeds based on timing and realisation of certain tax assets within the High Street business

The announcement adds: "In summary, WHSmith expects gross cash proceeds of up to £40million (with £10million expected in FY25; up to £20million in FY26; and £10million of deferred tax assets delivered as it becomes payable).

"This compares to the previous announcement of £52million of gross cash proceeds. Transaction and separation costs remain unchanged at £27million.

"Following the transaction, WHSmith expects headline net debt as at 31 August 2025 to be around £425million.

"As the group enters the peak summer trading period, the travel divisions continue to trade in line with market expectations."

FTSE 100

The UK's flagship share index, the FTSE 100, was up 48 points at 8,812 shortly after opening this morning.

Brent crude oil futures were up 0.5% at $66.47 a barrel.

More like this…

View all