WHSmith news goes

ABN AMRO Private Equity is set to acquire WHSmith’s news distribution business for GBP215 million. The agreement is subject to ABN AMRO completing due diligence and the approval of WHSmith’s shareholders. The managing director, Lloyd Wigglesworth, will leave the group on the completion of the sale. The sale also depends on whether the new management team can reach satisfactory arrangements with the group’s main customers and suppliers. ABN AMRO is unable to comment before completion of the deal.

Investors interested in the business are reported to have included 3i, CVC and Electra. In June JP Morgan Chase was reported to be the frontrunner in the bidding.

With 4,500 staff and 51 warehouses WHSmith News is the largest wholesaler of magazines and newspapers in the UK. It distributes to 23,000 retail customers each day.

In addition WHSmith provides services such as category management, information provision and merchandising. The deal also includes Connect2U, an independent web-based company formed as a joint venture between WHSmith Group and e-commerce consultancy, Axon Group. It links UK retailers, wholesalers, manufacturers and publishers.

The sale of WHSmith’s news distribution unit was announced last April when operating profits for the six months to the end of February fell GBP6 million to GBP12 million, compared to the same period last year. Commenting on the decision to sell the division, Richard Handover, chief executive, said: “Our strategy is to build a strong retail business supported by content from a strong and vibrant publishing business. We believe that there is considerable growth potential domestically and internationally for both our retailing and publishing interests. Our News Distribution business, despite its excellent record of cash generation and good future prospects, is not core to this strategy.”