WH Smith expands into US with £300m Marshall buy
UK newspaper and stationer retailer WH Smith said it was buying US travel retailer Marshall Retail Group (MRG) for $400m (£312m) in cash as it reported a 7% rise in full year profits.
The company said on Thursday the deal would be part-financed through a £155m share placing and the rest through a new debt facility.
The deal will double the size of the WH Smith's international business. MRG has 170 stores in North America, 59 of them inside airports, currently a target for Smith's travel unit as they provide high footfall and a captive audience.
“MRG's future growth prospects are underpinned by its highly successful airport travel retail business, which has a rapidly increasing footprint,” WH Smith said.
This deal also comes a year after Smith's purchase of MRG's US peer InMotion Entertainment for $198m, which was completed on Thursday with performance ahead of expectations.
On the annual results, WH Smith said revenue for the year to August 31 increased 11% to £1.4bn while headline pretax profit rose to £155m from £145m. The total dividend was increased 8% to 58.2 pence.
Travel total revenue rose 22% including the contribution from InMotion, underlining the strategy to move into travel retail. The division outstripped High Street operations where revenue and like-for-like sales both down 2%.
Smith said it has made a good start in the first six months of the current fiscal year with total travel revenue 25% higher and like-for-like sales up 5%. High Street like-for-like revenue was 3% lower. Group revenue was up 12% and like-for-like sales 1% higher.
"While there is uncertainty in the broader economic and political environment, we are pleased with the start to the new financial year in both businesses. Looking ahead, the Group will continue to focus on profitable growth, cash generation and delivering value for shareholders," said WH Smith's outgoing chief executive, Stephen Clarke.