WH Smith reveals demerger plans

24-08-2006

High street stationery chain WH Smith has unveiled details of its plans to create two distinct companies in August this year.

Today's announcement follows another made in April which revealed that the firm planned to split itself into two companies. New WH Smith will keep the retail side of the business while a separate company, Smiths News, will take control of its news distribution service.

Shareholders, who will receive one Smiths News share and one New WH Smith share for each share held in the current company, will have to confirm the demerger in an extraordinary meeting in early August.

"With a strong team in place to run Smiths News and the existing management team remaining to run retail as an independent company, both businesses will benefit from increased focus on their respective strategies," commented Kate Swann, WH Smith's chief executive.

Mark Cashmore, who will become Smiths News' chief executive, said that the demerger was an "exciting step".

"The team is looking forward to working as an independent company focused on building value for shareholders by providing value-added customer service to both publishers and retailers," he said.

WH Smiths' board decided to implement the demerger following its 2003 restructuring which successfully diversified the retail core of its businesses to develop its news distribution service.

It argues that the demerger, a major landmark in the firm's 214-year history, will help the Smiths News subsidiary develop a unique strategy and be able to "maximise its technological investments".

Meanwhile the traditional business of the company will be able to focus better on potential changes to the relationship between distributors and wholesalers, currently under investigation by the Office of Fair Trading (OFT).


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