WHSmith PLC (WHSmith) has announced it has acquired digital accessories ‘pure play’ travel retailer inMotion for US$198m. 

The acquisition is described as ‘very attractive’ and will double the size of the news, convenience and books retailer’s international travel business, while offering a ‘scalable’ growth platform in the US airport retail market.

Subject to conditions and US regulatory approval, the transaction expects to complete before the end of 2018.

In reaction to the announcement, the Group’s share price on the London Stock Exchange (LSE) jumped by 5.5% to peak at £1,861 in the early morning trade having opened at £1,762.5, before levelling off to around £1,801 in mid-morning.

SCALING UP IN THE US

Stephen Clarke, Group Chief Executive, WHSmith said in a statement: “The acquisition of InMotion is an exciting value creation opportunity for the WHSmith Group and marks a major step in our international travel retail growth strategy.

“The travel retail market in North America for digital accessories offers significant growth potential. As the market leader, recognised for its best-in-class customer service, InMotion is well positioned to take advantage of that potential.

“In addition, InMotion provides us with a scalable platform to launch the WHSmith airport format into the US, the world’s largest travel retail market for news, books and convenience products.

“Finally, building on our recent successes in the digital accessories category in the UK and on InMotion’s supplier relationships and experience, we see significant potential to accelerate growth outside of the US using the InMotion format.”

InMotion will operate as a standalone business of WHSmith’s international travel division.

The airport-based digital accessories player, which is the largest in the US with a portfolio of 114 stores across 43 airports including a footing in nine of the top ten busiest US airports, will continue to be led by CEO Jeremy Smith and an experienced management team.

Smith added: “The team at InMotion are delighted to be joining such an iconic business with a high growth international division. Working together, we look forward to combining our expertise in travel retail to grow the InMotion business further both within and outside of the US, while at the same time accelerating WHSmith’s international growth strategy.”

CASH ACCRETIVE TRANSACTION

WHSmith says it will maintain the strengths of the inMotion business and anticipates a ‘straightforward’ integration with ‘immediate strategic and financial benefits’ to the Group.

It states its approach to cash and capital allocation remain unchanged as a result of the deal.

On completion, the cash accretive transaction is forecast to generate pro forma leverage of approximately 0.8x EBITDA on a fully consolidated basis.

WHSmith’s travel business covers 582 points of sale across UK airports, railway stations, motorway service areas and hospitals, and 300 units outside the UK and currently accounts for two thirds of the Group’s operating profit.

InMotion merchandises a selection of digital accessories from leading suppliers in the category.

This covers premium headphones and earbuds, travel accessories, mobile power, portable speakers and action cameras. 

Calendar year-to-date, InMotion’s like-for-like sales has grown by 13% and is forecast to deliver approximately $166m in sales and EBITDA of approximately $123m in the financial year ending 31 December 2018.