Shareholders to convene next month for WH Smith’s proposed acquisition of MRG

WH Smith’s plans to buy the Marshall Retail Group (MRG) have been approved by the FCA and the transaction now only requires shareholder approval. A general meeting has been called on 18th December 2019.

The proposal to acquire the US indie travel retailer for $400m – financed through a new £200m loan facility and a £155m fully underwritten equity placing – was first disclosed last month and follows the acquisition of US airport retailer InMotion last year.

Valuing the US travel retail market to be worth $3.2bn annually, according to WH Smith the buy spells “significant growth” for its Travel division and will “broadly double” its international travel business. MRG generates the majority of its revenue selling news, gift and convenience products and has more than 170 North American locations, with 24 more stores due to open next year.

In the circular convening the general meeting and confirming FCA approval of the deal, published on 25th November, MRG was said to have “performed strongly” in its current financial year, ending December 2019, reporting that it expected adjusted EBITDA of around $31.5m.

In same circular, WH Smith said that its own year-to-date performance was “in line with expectations” for the financial year ending August 2020. It follows its financial results for the year ending August 2019, in which group revenue was up 11% (but just 1% like-for-like) to £1,397m, while profit before tax was £135m (2018: £134m).

A general meeting will be held for WH Smith shareholders on 18th December 2019 at city law firm Herbert Smith Freehills LLP.