WH Smith chief rejects hostile bid from Waterstone

WH Smith yesterday rejected a highly leveraged bid for the embattled music, books and stationery retailer by Tim Waterstone, its most successful former employee.

Tom Stevenson, Financial Editor, reports.

Richard Handover's first day as chief executive of WH Smith yesterday saw him rejecting a hostile takeover bid from bookseller Tim Waterstone that would have seen the new boss out of the job almost before his feet were under the table.

Smith said the chairman, Jeremy Hardie, had received a bid approach from Mr Waterstone last weekend but had no hesitation in rejecting the offer, which would have given shareholders 200p in cash together with shares in WH Smith NewCo, a heavily indebted acquisition vehicle set up for the bid. The rejection was announced after dealings in WH Smith shares closed at 365.5p, down 2.5p.

SBC Warburg Dillon Read acted for Mr Waterstone in raising pounds 1bn of funding to cover the cash element and capital investment in a bid which WH Smith said bore all the hallmarks of the over-ambitious debt-funded takeovers of the 1980s. The deal would have also involved the issue of warrants to the takeover's promoters which would be convertible into up to 5 per cent of Smith's share capital.

The proposed takeover would have seen Mr Waterstone, who left WH Smith in the early 1980s to set up the bookstore chain bearing his name, return to the company for a third spell, this time as chief executive. He returned when WH Smith acquired Waterstones in 1989, leaving in 1993 to pursue other retail projects. The latest of those, a children's emporium called Daisy & Tom, was to have been taken over by Smith as part of his proposals.

Mr Handover said yesterday the WH Smith board had considered the proposals but "firmly believes they are not in the best interests of shareholders". He said he had spoken to WH Smith's leading shareholders this week who had backed his decision to reject the approach.

He added: "The board has had no hesitation in dismissing these proposals which offer no real value to our own shareholders and no premium whilst burdening them with high-risk equity, unnecessary costs and an over-priced acquisition."

He said that under the proposals, no premium would have been paid to WH Smith's shareholders, who would be given an equity stake in a "highly leveraged" business and be forced to make "an overpriced acquisition of an unproven retail concept for children at an incomprehensible price".

The takeover approach represented Mr Handover's first major challenge in the top job, for which many observers said he was an unspectacular choice. The former head of the wholesale news arm was appointed after a three-month trawl to find a replacement for Bill Cockburn, who left after only 18 months in the job to join BT.

Mr Handover said advisers' fees would have cost shareholders pounds 34m and countered the approach by promising to "improve the profitability of the high street business by focusing on the core product groupings of books, stationery, newspapers and magazines".

PROMOTED VIDEO
Sport
Manchester United's kit for the 2014/15 season
football
News
Nadine Gordimer died peacefully at home yesterday
peopleNobel laureate was a powerful anti-Apartheid voice
Extras
indybest
Arts and Entertainment
Neil Young performs on stage at Hyde Park
musicAnd his Hyde Park set has rhyme and reason, writes Nick Hasted
News
Women have been desperate to possess dimples like Cheryl Cole's
people Cole has secretly married French boyfriend Jean-Bernard Fernandez-Versini after just three months.
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Extras
indybestThe tastiest creations for children’s parties this summer
Arts and Entertainment
TV The follow-up documentary that has got locals worried
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

Junior Professional Services Consultant - SQL, Implementation

£30000 - £40000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...

Programme Planner

£30000 - £45000 Per Annum: Clearwater People Solutions Ltd: Our client based i...

HTS GBM - KDB Developer, Kx Q Query Language, £750

£650 - £750 per day: Orgtel: Senior Analyst Developer (KDB/QKx plus Java and F...

Infrastructure Test Lead

£55000 - £60000 per annum + bonus + bens: Deerfoot IT Resources Limited: Our c...

Day In a Page

Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

Super Mario crushes the Messi dream

Germany win the 2014 World Cup in Brazil
Saharan remains may be evidence of the first race war, 13,000 years ago

The first race war, 13,000 years ago?

Saharan remains may be evidence of oldest large-scale armed conflict
Scientists find early warning system for Alzheimer’s

Scientists find early warning system for Alzheimer’s

Researchers hope eye tests can spot ‘biomarkers’ of the disease
Sex, controversy and schoolgirl schtick

Meet Japan's AKB48

Pop, sex and schoolgirl schtick make for controversial success
In pictures: Breathtaking results of this weekend's 'supermoon'

Weekend's 'supermoon' in pictures

The moon appeared bigger and brighter at the weekend
Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor