WH Smith is negotiating with two parties for the sale of its publishing arm, Hodder Headline. French-owned Lagadere is the front-runner in the sale, and the other party is believed to be either Simon & Schuster or HarperCollins.
A spokeswoman for WH Smith confirmed that due diligence is taking place, and the outcome of the contest is expected over the summer. Price is the main issue. WH Smith bought Hodder Headline in 1999 for £185 million, and analysts predict that the company will sell for between £200 million and £230 million.
Hodder's price almost matches the hole in WH Smith's pension fund, which has been calculated at £215 million. The deficit has put on hold the sale of the entire WH Smith group to venture capitalist Permira, although talks with the pension fund trustees continue. Speculation is mounting that Permira will make another adjusted bid for WH Smith.
