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WH Smith turns a new page with Marshall expansion plan
Posted on Thursday, 17 October 2019 09:59
UK-based stationery and book retailer WH Smith has agreed to acquire Marshall Retail Group for USD 400.00 million on a cash- and debt-free basis, to expand its operations in the US airport market. The buyer plans to finance the deal through a new GBP 200.00 million term loan facility to be provided by existing bank relationships, alongside an GBP 155.00 million underwritten equity placing. By picking up Las Vegas-headquartered Marshall, WH Smith will be able to double the size of its international travel operations in the USD 3.20 billion US airport travel market, where the target has over 170 stores, 59 of which are inside airports. This segment accounts for the majority of the buyer’s trading profit following the USD 198.00 million acquisition of InMotion last year. Marshall is expected to result in strong financial returns given its anticipated growth profile, with annual run-rate cost savings of USD 11.00 million in the third full year following completion. In addition, WH Smith is expecting mid-single digit earnings per share growth in the first full financial year, approaching double digit expansion in the second year. Subject to certain store landlord approval and the greenlight from shareholders and regulators, the deal is slated to close in the first quarter of 2020. Marshall generates the majority of its revenue through the sale of news, gifts and convenience products, with its airport unit expected to contribute USD 84.00 million to its expected USD 204.00 million in revenue for the financial year due to end December 2019. The business is also predicting earnings before interest, taxes, depreciation and amortisation of USD 31.50 million in FY 2019. Marshall is currently owned by Brentwood Associates, which paid USD 300.00 million for the company back in 2014 from ICV Partners. Following completion, the group will continue to be led by its existing management team from its headquarters in Las Vegas with Michael Wilkins to retain his role as chief executive. © Zephus Ltd