WH Smith pulled out of B&N takeover

News - Bookselling Wednesday, 07 November 2018

Secret deal collapsed earlier this year after WHS spent £2m on due diligence and other costs

The Wall Street Journal has reported that the company rumoured to have been near an acquisition of Barnes & Noble this spring was WH Smith. Last night The Financial Times in London confirmed the story, and pointed out that WH Smith’s recent full-year results included a reference to £2m of 'costs related to an uncompleted transaction.' Both companies have refused to make any public comment on the story.

News of a possible sale of B&N broke over the summer, after former ceo Demos Parneros filed a defamation lawsuit against B&N. Parneros, whose firing was first explained by B&N as being over unspecified company violations, claimed in his suit that, among other things, his relationship with B&N founder Len Riggio soured after a deal to buy the company fell through in June. Last week, B&N responded to Parneros, saying that he "intentionally sabotaged a potential acquisition of the company."

The deal would have thrown two heavyweights of bricks and mortar bookselling together; WH Smiths has 1,200 stores whilst B&N has 629, with at least one branch in every state in America. At $3.7bn B&N's turnover is a little over twice WH Smith's, but the share prices of the two companies tell a different story: shares in Barnes & Noble have dropped 75 per cent in the past 12 years, giving it a market capitalisation of less than $500m, whilst WH Smith has risen more than fivefold to value it at £2.1bn.

Furthermore, WH Smiths is generating steady, if not spectacular, profits whereas B&N has slumped to a loss of $135m.

Just last week WH Smiths did pull off a deal to buy an American retailer, snapping up InMotion, which operates 114 stores across 43 airports selling a range of digital accessories, including headphones and earbuds, portable speakers and action cameras, but not books. It paid £155m for the business.


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