WH Smith PLC (LSE:SMWH) shares fell 7% after it agreed to reduce the price it sold its High Street business to private equity firm Modella Capital after a period of softer trading.
In all, a price of £40 million has now been agreed, down from the original £52 million cash deal, which was hoped to reach £76 million once all costs were accounted for.
Under the revised terms, WH Smith received an upfront consideration of £10 million on completion, with up to £20 million of deferred consideration expected as both WH Smith and Modella equally share in the cash flow generation of the business from now until August 2026.
In addition, the FTSE 250-listed retailer expects up to £10 million of additional proceeds based on "timing and realisation of certain tax assets" within the High Street business.
Explaining why it agreed to knock down the price, WH Smith said a "more cautious outlook among stakeholders" had emerged after a period of softer trading in the High Street business after the sale was agreed in March, which led to lower levels of cash flow.
This seemed to lead Modella to threaten to pull out of the deal unless it could secure new terms, with WH Smith agreeing that the original agreement was "no longer deliverable" and so entered into negotiations to revise the terms.
In total, WH Smith has received £10 million in the current financial year, up to £20 million in the 2026 year and £10 million of deferred tax assets delivered "as it becomes payable".
Transaction and separation costs remain unchanged at £27.00 million.
Following the transaction, WH Smith expects headline net debt at 31 August to be around £425 million, saying its core travel divisions "continue to trade in line with market expectations."
The shares fell over 7% to 1040p in early trading on Monday, though little moved from the share price before the deal was struck three months ago.