WH Smith attracts further bid interest

TAKEOVER speculation surrounding WH Smith heightened yesterday amid reports the struggling retailer could be about to attract further bid interest.

Venture capital outfit Permira, which currently has permission to go through the group's books, may face competition from entrepreneur Tim Waterstone.

Mr Waterstone, who founded the bookseller that bears his name, was examining possible options. Private equity firms Cinven, Apax and CVC could enter the fray, possibly in conjunction with Mr Waterstone.

News of Permira's £940 million-valued interest emerged last week when WH Smith confirmed it had received an approach.

WH Smith later unveiled a 29% fall in underlying half-year profits and outlined a strategy to revive the fortunes of the group.

The Permira bid is being spearheaded by former Hamleys boss, the Irishman Simon Burke, and Moss Bros chairman Keith Hammill.

According to reports, Permira will look at selling the company's newspaper and magazine distribution arm if its bid is successful. It is thought the wholesale operation could fetch more than £200m.

Following Friday's £47m sale of WH Smith's Asia Pacific division, the group would be left with its Hodder Headline book publishing business and the network of shops at British high streets, railway stations and airports.

Those outlets were the cause of the company's January profits warning as strong price competition in areas such as CDs and books hit Christmas sales.

However, new chief executive Kate Swann is quoted today as being "really confident" that she can turn around the business.

She said: "There's a lot wrong operationally and that stuff is absolutely fixable it's a low-hanging fruit.

"I cannot put a time on it, but we're already way under operationally and are making progress. People will start to see things happening in time for Christmas."

Mr Waterstone, who bought the Early Learning Centre for £62m earlier this month, was thwarted in a bid for WH Smith in the late nineties.