How I would breathe life into WH Smith

Tim Waterstone's ambitious bid to take over WH Smith remained on the table yesterday as the bookseller outlined his plans for transforming the embattled high street chain. Tom Stevenson shared his vision.

Tim Waterstone yesterday promised a root and branch shake up of the "deadening culture" at WH Smith if his takeover proposals for the record shops to stationery group are reconsidered. Speaking for the first time since his audacious highly leveraged takeover plan was rejected out of hand by the company, he outlined his vision for transforming WH Smith's underperforming high street shops.

Countering the company's claim that his bid proposals would simply saddle the group with unwanted debt, he promised to sell the Our Price record shops to WH Smith's partner, Virgin, and to dispose of its American operations. That would reduce the pounds 1bn of debt that SBC Warburg, Waterstone's adviser, has proposed raising to fund the deal.

Making those disposals was not critical to the success of the takeover arithmetic, Mr Waterstone said. But he admitted that, for his proposals to make sense, he would have to generate like for like sales growth from the core retail chain of 4 to 5 per cent a year, compared to the current flat performance.

"It is a complete tragedy to watch this foremost retail brand go backwards at a rate of knots," Mr Waterstone said, as he promised to transform WH Smith's drab, underperforming high street shops by focusing on "books, news and beautiful stationery".

He said videos and music would be ditched as WH Smith focused on its three main product lines. Ranges would widen, the quality of staff would be improved and buying would get better. "Smiths used to do it well. We would concentrate on its old values," he added. "You completely change the culture, you Waterstone it."

Transforming the chain would require beefing up the book section, enlarging the news offering to become the "authoritative newsagent again" and taking the stationery range upmarket. Smith, with more than 500 shops, has been losing market share to supermarkets, which sell many similar lines.

Mr Waterstone's proposals, which envisaged a 200p a share cash payment to WH Smith shareholders, together with a share in a heavily borrowed acquisition vehicle, were still being treated with scepticism in the City yesterday. Analysts and WH Smith's large shareholders said they were waiting for concrete proposals to be tabled.

Despite Mr Waterstone's claim yesterday that WH Smith chairman Jeremy Hardie had been interested in his proposals as late as Tuesday afternoon, it was not felt that the company had acted hastily in dismissing the plan without putting it to shareholders.

One leading shareholder, who wanted to remain anonymous, said: "There is often a lot of sound and not much light in these situations. If there is something credible we would like to explore it, but we have a slight feeling that this is the 1980s all over again."

He added that, while new chief executive Richard Handover had a lot to prove, he should retain shareholders' support.

John Richards, an analyst at NatWest Markets, was equally sceptical: "We don't regard it as a serious offer and taking on that level of debt is potentially problematical for a company with strategic issues to resolve."

He questioned whether Mr Waterstone had the experience or ability to run a public company of WH Smith's size.

The Waterstone team also hit back at the assumptions made by WH Smith in its rejection on Wednesday. It denied putting a valuation of pounds 35m on Mr Waterstone's latest retail venture, the Daisy and Tom children's store on London's King's Road.

That figure, it said, was inferred by WH Smith from its proposal and, if true, implied a valuation of pounds 1.6bn for the group, a substantial premium to its current market value. It also questioned WH Smith's calculation of advisers' fees of pounds 34m.

Start your day with The Independent, sign up for daily news emails
News
people
News
A boy holds a chick during the Russian National Agricultural Exhibition Golden Autumn 2014 in Moscow on October 9, 2014.
news
Life and Style
love + sex
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle v United 1 player ratings
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
ebooks
ebooksA special investigation by Andy McSmith
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot