Potential bidders for WH Smith PLC (LSE:SMWH) high street chain include private equity firms Hilco and Alteri plus Modella Capital, which last year bought Hobbycraft, according to reports today.
What a private equity takeover deal would mean for the future of the WH Smith high street estate and roughly 5,000 workers is not clear, but the business has run like a PE outfit for years anyway, said analysts.
Peel Hunt analyst Jonathan Pritchard told PA: “It is hardly as though this is a fat business, with lots of inefficient processes and store staff dossing about. Quite the opposite.
“Store closures could be material in somebody else’s hands, but WH Smith itself, clearly, has a good line of sight on how to get the most out of the chain, and it is unlikely that anyone else has the silver bullet to regalvanise profitability here.”
Earlier this month, WH Smith said it plans to close 17 of its high street shops during 2025.
Estimates touted today suggested that the high street business could be sold for £100 million or more with a deal completed by spring.
Shorn of the high street arm, WH Smith would be a pure travel retail operation in airports, railway stations and hospitals, with some 1,200 stores globally.
The reports today added that WH Smith plans to retain its name for its travel business.
Travel accounted for 75% of the company's revenue and 85% of trading profit in its last annual accounts and the way it has been run for cash has led to repeated questions over why it was still part of the group.
Following that reasoning, broker RBC said that a High Street sale would remove a reason not to buy the shares
“We view WH Smith's announcement that it is exploring strategic options, including a sale, for its High Street business as a positive.
“We think this should allow management to focus on its more attractive Travel business.”
Shares rose 1.4% to 1,164p against RBC’s target of 1,400p.