Struggling retailer WH Smith took a step in its restructuring today by unveiling an agreement to sell its Asia Pacific arm for £47m.
The announcement of a deal with Sydney-based Pacific Equity Partners came a day after WH Smith confirmed it was working on plans to sell the business.
Results yesterday also highlighted the difficulties facing the high street group, which saw half-year profits fall 29% to £65m.
The division being sold today includes Angus & Robertson in Australia, a business with an 18% share of the country’s book market.
There is also New Zealand book and stationery group Whitcoulls, plus operations in Hong Kong.
WH Smith wants to sell the division, which it acquired in 2001, so it can concentrate on its domestic business, which has suffered in the face of intense price competition from the likes of supermarket giant Tesco.
The price of the deal AUS$115m, represents a significant gain on the carrying value of the assets on the books of WH Smith.
As a result, the group said it would take an exceptional gain in results for the second half of its financial year.
In yesterday’s half-year figures, the Asia Pacific division – also including Singapore Airport operations not part of today’s deal – achieved a £2m rise in profits to £7m.
Favourable currency rates helped sales to rise by £16m to £97m, while the like-for-like figure was 2% stronger than a year earlier.
Today’s agreement is still subject to conditions, including financing, regulatory approvals and certain landlord consents.
WH Smith plans to sell the Singapore airport operation separately.
The group said yesterday it would allow private equity group Permira, which has approached it about a potential £940m takeover bid, to conduct due diligence on the company.
Around 270 jobs are also being lost at Swindon and London as part of the restructuring drive.
References: EGi News 23/04/04
