WH Smith has revealed plans to snap up a US travel company for more than £300m as the retail giant looks to broaden its scope beyond the UK high street.
In a deal that will double the size of the firm’s international business, WH Smith is buying Marshall Retail Group for $400m (£312m) to ramp up its travel operations and tap into growth within the airports market.
Read more: Retailers brace for tough Christmas
The deal, which will be financed through a combination of new debt and equity, was cheered by investors after the opening bell as shares climbed almost five per cent.
The planned acquisition of the Las Vegas-based firm will add 170 new locations, including 59 at airports.
Peel Hunt analysts Jonathan Pritchard and John Stevenson call today a “watershed moment”, with the acquisition expected to “completely galvanise the travel side of WH Smith, making it a major player in the States and now one of the serious names in global travel retail”.
Departing chief executive Stephen Clarke also raised the dividend after posting a rise in profit and revenue.
The newspaper, books and stationery retailer reported a seven per cent rise in annual pre-tax profit to £155m.
Group revenue edged up one per cent to almost £1.4bn, boosted by a 22 per cent revenue rise in its travel division.
Donald Brown, senior investment manager at Brewin Dolphin, added: “WH Smith continues to be a tale of two businesses. Despite the challenging retail backdrop, the group is delivering strong growth at its travel division, where its 1,019 units delivered a 22 per cent rise in sales.”