U.K. retailer WH Smith made its second push into the U.S. airport retail space with a $400 million deal to buy travel retailer Marshall Retail Group.
WH Smith, which sells books, travel accessories, and food, has been aggressively opening new shops at major airports worldwide.
Marshall, which was bought in 2014 by private equity firm Brentwood Associates, has more than 170 stores in the U.S., 70 of them in airports. Alongside its airport stores, the company’s stores are in resorts and tourist locations — primarily in Las Vegas.
WH Smith said it would fund the deal with $255 million in debt and about $200 million in new equity. The company said it would suspend its share buyback program while it pays off debt.
Carl Cowling, who will replace Stephen Clarke as the chief executive officer of WH Smith in November, said the deal will roughly double the size of the company’s international travel business.
“This acquisition will accelerate the growth of our international travel business and combined with InMotion, the market leading digital accessories airport retailer that we acquired last year, will significantly enhance our scale and growth opportunities in the US, a large and fast growing travel retail market,” Cowling said in a statement.
In October 2018, WH Smith announced it was buying InMotion, a Florida-based digital accessories retailer with shops in 43 airports, for $198 million.
Jonathan Pritchard, an analyst at Peel Hunt, said the deal “completely galvanizes the travel side of WH Smith, making it a major player in the States and now one of the serious names in global travel retail.”
The deal is expected to close in the first quarter of 2020.
Profits from the WH Smith’s travel business, which includes shops at airports, train stations, and hospitals, was up 14% for the year ended August 31.
WH Smith also said it has contingency plans in place to deal with Brexit fallout, including increasing the stock of convenience products.
The company’s stock was up more than 5% at the end of trading in London Thursday.
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