WHSmith Sells Up – A Midweek Guide to Buying Pens, Paperclips, and an Entire Business

This week, a nostalgic chunk of British retail history looks set to pack its bags. WHSmith – purveyor of airport holiday reads, over-priced stationery, and the random temptation of reduced chocolate bars when you just want to pay for a pack of Bic pens – has agreed to sell its entire UK high street business to private equity firm Modella Capital for £76 million.

All 480 shops are going. Gone. Vanished (well, sort of – more on that in a moment). WHSmith, which first opened its doors in 1792  – back when you wouldn’t be seen dead out in public without a hat – is handing the keys to Modella and focusing on its more glamorous, jet-setting sibling: the travel retail arm, now booming in airports, train stations, and hospitals across 32 countries. Because nothing says “impulse buy” like a Sudoku book before boarding your EasyJet flight.

From a boardroom perspective, this isn’t exactly a shocker. The high street division accounted for just 25% of group revenue and just 15% of profits. WHSmith decided it was time to streamline, and the high street didn’t make the final cut.

The sale doesn’t require a shareholder vote and is expected to complete before the end of WHSmith’s current financial year. Net proceeds will be about £25 million, once transaction costs and admin faff are stripped out.

Around 5,000 staff will transfer to Modella under TUPE – that’s the Transfer of Undertakings (Protection of Employment), for the acronym fans among us; and it basically means that when a business is sold, its employees go too – on the same terms and conditions. So, Modella won’t be starting from scratch; they’ll inherit the existing workforce, the contracts, the annual leave calendars, and presumably Barry from accounts who hasn’t taken a day off since 1997. It’s employment continuity, quirks and all.

Oh yes, and WHSmith won’t be WHSmith anymore. The high street stores will be rebranded as TGJones, a name supposedly chosen for its sense of “familiarity and trust,” though it has mostly prompted raised eyebrows and pub-level mockery. To go from Smith to Jones is hardly the boldest leap in the Book of Trustworthy British Surnames.

But fear not – the WHSmith name isn’t disappearing entirely – it will continue to adorn shop fronts at airports, train stations, and hospitals around the globe, where the company’s travel business continues to thrive. So, your panic purchase of a neck pillow at Heathrow remains unaffected.

Who is Modella Capital?

Modella is a London-based private equity firm that likes its retail a bit rough round the edges – they’re the fixer-uppers of the commercial world. They specialise in turning around consumer businesses across the UK and Western Europe, usually with turnover between £10 million and £1 billion.

Their current CV includes Hobbycraft, The Original Factory Shop, and Crafter’s Companion (owned by Dragon’s Den’s Sara Davies), the latter rescued via a pre-pack administration. Clearly they enjoy a bit of corporate DIY –  glue gun in one hand, restructuring term sheet in the other.

WHSmith’s high street business may be their toughest project yet – but Modella seems up for the challenge.

So How Do You Actually Buy a Chain of 480 Shops?

Modella hasn’t disclosed the exact financing recipe (PE firms can often be tighter-lipped than you mate who suddenly “can’t talk about” their new job in Mayfair), but based on precedent and private equity norms, here’s how the £76 million deal likely comes together:

1. Equity Financing

Modella will almost certainly be putting up some of its capital – either from its own internal fund or co-investors. A healthy equity slice gives flexibility, speed, and fewer people to ask for permission when bold choices are made (like calling a shop TGJones).

2. Asset-Based Lending (ABL)

Retail businesses often have lots of juicy collateral – stocks, leaseholds, and receivables. These can be used to secure a loan. In the Hobbycraft deal, Modella teamed up with Secure Trust Bank for exactly this – so there’s every chance they’ll repeat the same trick here.

3. Sale and Leaseback

If any WHSmith’s stores, or its Swindon support centre are freehold, Modella could sell them to a property investor and lease them back. It’s the private equity version of “selling your PlayStation to pay rent.”

 4. Vendor Financing

WHSmith might have agreed to a deferred payment setup – i.e., Modella pays part of the price over time. This smooths the transition and reduces the need for up-front cash. Handy when your pockets are deep, but not that deep.

5. Pre-pack Administration (Not Used Here, But in Their Toolkit)

Modella used a pre-pack to buy Crafter’s Companion out of insolvency. WHSmith’s high street business isn’t insolvent (just uninspired), but the firm clearly knows its way around the distressed end of the retail pool.

6. Unitranche or Blended Debt

For the finance nerds at the back: Modella might turn to unitranche debt – a combination of senior and junior loans blended into one convenient repayment stream. Great if the business is bringing in steady cash. A bit riskier if your tills are ringing as quietly as WHSmith’s on a Tuesday afternoon.

7. Strategic Co-Investors

Big deals often come with co-investors – family offices, pensions funds, or that mysterious bloke called Dave who runs a Cayman fund. No such partners have been confirmed here, but it wouldn’t be surprising.

A Likely Financing Stack (Speculative but Educated Guess)

• £25 million equity (Modella and/or co-investors)
• £35 million ABL (secured against stock, leases, receivables)
• £10–15 million vendor financing (deferred consideration)
• Balance: Working capital lines, short-term lines, and perhaps a whip-round in the Modella office kitchen.

The Last Word

This isn’t just a story of WHSmith waving goodbye to the high street, it’s part of a broader trend. Established names are offloading their baggage, and private equity firms are rifling through it like it’s a car boot sale.

What makes it all work? A clever capital structure. These deals are like financial Jenga – each block (debt, equity, property, partnerships) stacked just right to balance risk, reward and turnaround potential.

Whether TGJones becomes the next great British comeback or ends up feeling like a rebranded B&M – familiar, functional, and still no one knows what the letters stand for, remains to be seen.

But name change or not, we’ll always have a soft spot for good old WHSmith. Preferably at Terminal five, coffee in hand, leafing through The FT while pretending not to eye up the giant Toblerones.