WH Smith to buy US airport and casino resort retailer for $400m

WH Smith (SMWH.L) on Thursday said that it was acquiring Marshall Retail Group, a US retailer that operates stores in airports and casino resorts, for $400m (£318m).

The move, which will see it take on the group’s 170 stores across the United States and Canada, accelerates WH Smith’s international expansion, which has been focused on the $3.2bn US airport travel retail market.

WH Smith acquired American travel accessories retailer In Motion this time last year for $198m.

The latest deal will be financed through a new £200m loan facility and around £155m in new WH Smith shares. WH Smith will temporarily suspend its share buyback programme while it conducts the proposed placing of the new shares.

Marshall Retail Group is a privately held, Las Vegas-based company with more than 1,000 employees. Its retail offerings bear a resemblance to those of WH Smith, whose stores typically sell books, stationery, magazines, newspapers, entertainment products, and confectionery.

The Marshall portfolio includes souvenir shops, news and gift outlets, as well as fashion, shoe and accessory stores.

Noting that the deal would roughly double the size of its international travel business, WH Smith said on Monday that Marshall Retail Group was a “fast growing and highly successful” retailer with a “proven business model”.

WH Smith said it had a clear integration plan and that Marshall Retail Group’s existing management were incentivised to drive growth.

As a result of the acquisition, WH Smith said it expects earnings per share, a key measure of profitability, to increase by the mid-single digits in the first year. Earnings per share will approach double-digit growth in the following year, it said.

WH Smith also said on Thursday that full-year before-tax profits had jumped 7% to £155m, driven by strong 14% growth in its travel stores.

Profit from the high street was flat, at £60m. Revenue climbed 11% in the year to the end of August.

“This acquisition will accelerate the growth of our international travel business and combined with InMotion, the market-leading digital accessories airport retailer that we acquired last year, will significantly enhance our scale and growth opportunities in the US, a large and fast-growing travel retail market,” said Carl Cowling, who will take over as WH Smith CEO on 1 November.

“This is an exciting value creating opportunity, entirely in line with our strategy,” Cowling said.