30th Oct 2018 08:47
LONDON (Alliance News) - WH Smith PLC said Tuesday that it has bought US-based travel retailer InMotion Entertainment Group LLC for USD198 million as part of the company's strategy to expand its international travel division.
Shares in the company were up 6.8% at 1,851.00 pence each, the top gainer on the FTSE 250 index.
The UK listed books and stationery retailer also reported a 1% rise in group like-for-like revenue and 5% in total revenue for the first eight weeks of new financial year.
The Travel unit, which now generates two thirds of annual operating profit, recorded a 4% rise in same store sales and a 10% jump in total revenue. Same store sales and total revenue for the High Street unit fell by 2% and 1% respectively in the eight-week period.
The UK listed books and stationery retailer said the InMotion acquisition will double the size of the company's international travel business and will support the launch and growth of WH Smith's airport format in North America.
The deal is predicted to be earnings per share accretive in first full financial year after completion, which is expected by the end of 2018.
InMotion, which will continue to operate as a standalone business of WH Smith, is the largest airport-based digital accessories retailer in North America and operates 114 concession stores across 43 airports in the US. For 2018, InMotion is expected to deliver sales of USD166 million and earnings before interest, taxes, depreciation and amortisation of USD23 million.
To support the acquisition, WH Smith has signed a new four-year term loan of GBP200 million with existing lenders and extended its revolving credit facility of GBP140 million for further year to December 2023.
Earlier in October, WH Smith reported a 4% drop in pretax profit to GBP134 million for its financial year to August 31, from GBP140 million a year ago, after incurring a GBP11 million charge on restructuring and store closure costs. Revenue increased to GBP1.26 billion from GBP1.23 billion due to WH Smith's healthy Travel business.
The retailer also announced a overhaul of its High Street division due to challenging trading conditions. The restructuring included closure of six stores and a review of the cost base.
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