WH Smith 'facing reduced bid'

Private equity firm Permira was today understood to be planning to offer a reduced £850m (€1.2bn) for British retailer WH Smith.

Representatives from the group are reported to have met five banks on Friday to discuss funding for the bid.

It is understood a new offer could be put forward within the next two weeks of around 340p a share.

Talks on a £940m (€1.4bn) takeover of the group collapsed earlier this year after Permira learned it would have to make a “substantial” contribution to WH Smith’s pension fund.

Trustees of the scheme had insisted Permira plug a £215m (€322m) shortfall immediately if its 371p a share offer was successful.

The venture capitalist group had wanted to adopt a similar strategy as the one currently employed by WH Smith of making up the deficit over the coming decade.

Permira was also reported by Sunday newspapers to have recruited Debenhams chairman John Lovering to help with its bid.

It was reported that Mr Lovering, who has previously worked for Permira when it bought Homebase from Sainsbury’s three years ago, could become vice-chairman of WH Smith if the group is successful.

The Permira bid is being spearheaded by former Hamleys boss Simon Burke and Moss Bros chairman Keith Hamill – a former finance director of WH Smith.

WH Smith announced in April that its high street shops had delivered an “unacceptable” performance as half-year profits plunged 29%.

Fierce competition from supermarkets and internet retailers for its core sales of books, records and DVDs have hit sales hard as the retailer has struggled to hold its once-dominant market position.

No one from Permira was available to comment.