Outlook: Whiff of 1980s in WH Smith bid

You have to admire Tim Waterstone's chutzpah, but his takeover bid for WH Smith belongs in Fiction A-Z rather than Business Books (corporate finance). Still, not to worry. His flight of fancy warmed the hearts of anyone who remembers with any fondness the swashbuckling, highly leveraged raids of the 1980s.

As it stands, it is hard to see the offer as anything but the latest instalment in the Mills & Boon love/hate story between Waterstone and his former employer. Not to be ignored, though, is the sub-plot - an opportunistic attempt by SBC Warburg to snatch a slice of Smith's recovery for itself through an issue of warrants that would give it 5 per cent of the company.

In essence, shareholders are being asked to swap their 370p shares in Smith for 200p of cash and an uncertain stake in an acquisition vehicle labouring under pounds 1bn of borrowings. This is not a break-up, the bid team promises, but it is hard to see how the sums could be made to add up without some pretty rapid disposals.

WH Smith is undoubtedly up against the ropes, but surely things aren't so bad that it needs to take on a pile of debt, appoint a chief executive with no experience of running a pounds 3bn turnover group and buy a retail concept it doesn't want.

The argument that Tim Waterstone's retail vision will transform tired old WH Smith and shareholder value be miraculously enhanced simply by borrowing some cash and handing 60 per cent of it to shareholders is so much stardust. What is for certain, however, is that the bankers have spotted value and while Tim Waterstone may not get his bookshop back, the tide may be turning for WH Smith's down trodden shareholders.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat