Further to the announcements made on 18 April and 22 April 2004, the Board of WH Smith PLC ("WHSmith" or the "Company") announces that Permira has advised the Company that it is highly unlikely that it will make an offer for WHSmith at 371p per share.
Permira has informed the Company that it has been advised by the Chairman of the Trustees of the WHSmith Pension Trust that a substantial cash contribution to the pension fund would be required in the context of an offer for the Company financed by a significant level of borrowings with security over the Company's assets. In light of these developments, the Company has suspended discussions with Permira pending clarification of the level of any possible offer for the Company.
This statement is not being made with the agreement or approval of Permira.
The Board also announces its intention to sell or demerge its publishing business, Hodder Headline, before the end of 2004. Hodder Headline has performed strongly under WHSmith ownership and this performance continues in the current financial year. The Board believes that a separation of Hodder Headline from WHSmith will create value for WHSmith shareholders and will accelerate opportunities for Hodder Headline itself.
The Company is in discussions with a number of parties who have expressed an interest in purchasing Hodder Headline. If Hodder Headline is sold, it is the Company's intention to return cash to shareholders. As an alternative to a sale, a demerger would provide existing WHSmith shareholders with a direct interest in an excellent business and the opportunity to participate in any further value gains arising from growth opportunities. Upon any divestment of Hodder Headline, it is expected that the Trustees of the WHSmith Pension Trust will require a cash contribution to be made to the WHSmith Pension Trust.
The Company confirms that it is currently trading in line with its expectations.
Commenting today, Kate Swann, Group Chief Executive, said:
"Hodder Headline is a premier publisher which has performed well for the past five years under Tim Hely Hutchinson's management. The Board believes that a sale or demerger of Hodder Headline will not only realise value for WHSmith's shareholders but will also allow Hodder Headline to fulfil its ambitions more effectively within the global publishing arena. "With the exit from the USA, the sale of our ASPAC businesses and the demerger or sale of Hodder Headline, the Group structure is being radically sharpened. These strategic actions enable a greater focus on our core retail and news businesses."