WH Smith linked with move for Paperchase

May 18 2008

Retailer WH Smith was today linked with a possible £50 million bid for stationery chain Paperchase.

Paperchase has been put up for sale by US books and music group Borders and WH Smith is mulling an approach, according to the Sunday Telegraph newspaper.

A tie-up between the two firms would add around 100 Paperchase UK stores to WH Smith’s 1,000 existing shops on the high street and at motorway service areas, airports and train stations.

It would be the latest acquisition move for WH Smith chief executive Kate Swann after her £19 million deal to strengthen the group’s presence in hospitals across the UK by buying UNS Hospitals in March.

But she may also face competition for Paperchase, which was founded more than 30 years ago. Games and music retailer HMV and private equity firms could also show interest in the chain, the Telegraph added.

Investment bank JP Morgan Cazenove is said to be handling the sale process for Borders. A WH Smith spokeswoman said: “We never comment on rumour or speculation.”

At interim results in April, WH Smith posted an 8% rise in half-year profits to £64 million after stronger trading at its travel locations offset a sales drop on the high street.

The retailer said results reflected a stronger focus on core products, such as books and stationery, and £4 million of cost savings at its high street arm. Ms Swann remained confident in the company’s performance for the full-year, despite an uncertain economic environment.