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Buyers of Whsmith’s High Street business have renegotiated prices downwards after trading in the chain in recent weeks.
Whsmith expects to receive up to £40 million in total cash revenue from sales to Modella Capital, compared to the £52 million forecast when it first announced its contract on March 28th.
The renegotiation with Modella, which plans to change the name of the 233-year-old business to TG Jones, said in a statement that “the future of high street business under the change in ownership has led to a more cautious outlook among stakeholders.”
Sales have been completed. News of revised terms and conditions lowered the stock price by almost 5% in the morning trading in London.
Modella, a UK consumer and retail investment company, also owns Hobbycraft and the Original Factory Shop, said in March that it “strongly believes in the future of High Street” following previous speculations by previous analysts that new owners could consider closing their stores on an efficient drive.
On Monday, Whsmith said both sides had discussed amendments to the transaction “considering that the original agreement is no longer delivered.”
Whsmith has around 1,300 stores worldwide, located in airports, railway stations and hospitals. The group is focusing on profitable travel retailers, which offload all 480 outlets to boulevards, shopping centres and retail parks, making up a large part of their sales and profits.
A Goldman Sachs analyst said Monday that “the revised terms are slightly disappointing and perhaps (probably) the focus of the market,” but that the sale of the High Street Arm was “a step towards turning Whsmith into a pure play traveler.”
