MBO likely for chain of newsagents

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The Independent Online
WH Smith and John Menzies ruled themselves out of the bidding for the Forbuoys newsagent chain yesterday as a management buyout emerged as the most likely candidate. WH Smith, which is the largest operator in the sector, said the 700 Forbuoys stores were too small and did not fit with its operations. WH Smith stopped selling cigarettes some time ago and does not sell confectionery.

"We don't want to go back to that market," a WH Smith spokesman said. "The Forbuoys stores are also too small at around 750 to 1,500 square feet. These days 2,000 square feet is small for a branch of Smith's."

John Menzies, the Edinburgh-based chain that has around 2.7 per cent of the market, said yesterday: "We are not interested."

Forbuoys was put up for sale earlier this year by Gallaher, the tobacco group. Kleinwort Benson is handling the sale and bids must be tabled by tomorrow. Between 20 and 25 potential buyers have emerged for the chain, expected to fetch about £60m.

Forbuoys' management, led by the chairman, James Lancaster, has made an offer for the newsagent group, and industry experts view a management buyout as the most likely outcome for the chain.

The acquisitive T&S stores is another candidate. From origins in Wolverhampton, the company has grown from 59 outlets in 1984 to more than 600, and is now the second-largest player in the sector. The company is strong in the West Midlands but has only 23 per cent of its outlets in the South- east, which is Forbuoys' stronghold.

Martins, the chain owned by a consortium of banks together with News International, has 760 outlets, but the geographical spread of its stores is believed to be too similar to Forbuoys' to make a takeover worthwhile.