WH Smith joins race for AOL book publishing arm

WH Smith has joined the bid battle for the book publishing division of AOL Time Warner in a deal which could be worth £250m.

WH Smith wants to merge the business with its Hodder Headline publishing division which it acquired in 1999. AOL Time Warner's book division includes the Little, Brown and Warner Books imprints and is home to authors such as Iain Banks and Margaret Atwood.

Smith's has teamed up with CinVen, the venture capital group, to provide equity capital to fund the merger. Smith's, which has long been linked with a US publishing deal, said discussions were at a preliminary stage.

Hodder Headline has a share of about 7 per cent of the UK publishing market and has been successfully moving into "own brand" books on subjects such as cooking and gardening. Smith's said a deal with the Time Warner division would help create "one of the leading transatlantic publishers."

Smith's is likely to face competition from Penguin, part of the Pearson media empire, and from Frank H Pearl, the founder of Pegasus Books. ZelnickMedia, an investment company founded by Strauss Zelnick, the former chief executive of the Bertelsmann music division BMG, is also thought to be interested. Random House, part of Bertelsmann, is also thought to be in the running. HarperCollins, part of News Corporation, dropped out of the race earlier this week.

AOL is likely to move quickly on the deal as it seeks to cut its £18bn debt mountain.

In January shares in Smith's slumped to a 13-year low after the group announced a drop in underlying sales over Christmas. The company said it had made a deliberate decision not to match "kamikaze" pricing of CDs by supermarket rivals and concentrate on building margins instead.

Richard Handover, chief executive, also admitted that an advertising campaign, which focused on brand-building rather than specific products, had not been successful.

Book sales in the Christmas period were down by 3 per cent on the previous year. This was largely in fiction where arch-rival Waterstone's ran strong promotions.

The group's US retail operations have been struggling as the stores are based in hotels and airports where sales have suffered since the 11 September attacks.

Separately AOL Time Warner is reported to be increasing efforts to sell its CD and DVD manufacturing division of its Warner Music subsidiary. Warner Music is one of the music labels linked with a possible merger with the UK's EMI.

WH Smith shares closed 0.25p higher at 246.25p, though its announcement was issued after the market had closed.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map