WH Smith backs down and agrees to meet Waterstone

The embattled retailer WH Smith has agreed to sit down with Tim Waterstone early this week to discuss his revised proposals for its restructuring, probably tomorrow. Tom Stevenson reports on the change of heart at Smiths.

The latest unexpected twist in the saga marks a substantial climb-down by Smiths' executive directors, led by Richard Handover, chief executive, and Keith Hammill, finance director. Throughout last week the two executives insisted Mr Waterstone's proposals to install himself as chief executive of Smiths and gear it up with more debt were wholly without merit.

The decision to meet follows a week of briefings of institutional investors by the Waterstone camp which persuaded some shareholders to press the board into entering negotiations.

Mr Waterstone's plans, which originally envisaged a 200p-per-share payout to shareholders, funded by almost pounds 600m of new debt, were being refined over the weekend by Waterstone's adviser SBC Warburg to meet investors' concerns.

The new proposals to be discussed tomorrow will see a lower payout to shareholders of between 125p and 150p. They will also receive shares in a new company with around pounds 400m of new debt. That will soothe fears that Mr Waterstone was planning to add too much financial gearing to the company's already high operational indebtedness.

It also emerged over the weekend that WH Smith's four non-executive directors were not present at the meeting almost two weeks ago at which it was decided to reject Mr Waterstone's initial approach.

Mr Handover was originally quoted as saying the whole board was present at the meeting and was unanimous in its rejection of the takeover proposals.

According to one non-executive director, none of Martin Taylor, chief executive of Barclays, Marjorie Scardino from Pearson, Patrick Lupo and Michael Orr had attended.

WH Smith has denied strongly any dissent among its board members over the decision, but stories were circulating at the weekend that Jeremy Hardie, the non-executive chairman who first discussed the proposals with Tim Waterstone, is likely to be replaced.

The past two weeks have been an extraordinary baptism of fire for Smith's new chief executive, Richard Handover, who announced Mr Waterstone's approach and the board's rejection of it on his first day in the top job. He has been with the group for 26 years, but was only recently named as successor to Bill Cockburn, who quit unexpectedly after just 18 months.

It was widely suspected that WH Smith had tried and failed to find a suitable outsider to take on the job before turning to Mr Handover. But it is still thought likely that shareholders will back his fresh attempt to rejuvenate the underperforming retailer.

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?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there