WH Smith is spinning off its UK high street business to Modella Capital, marking a major milestone in a long history of retailing.

The business has been acquired by the owner of Hobbycraft in a deal with an enterprise value of £76m, on a cash and debt-free basis.

The WH Smith brand is not included in the sale which leave the group to become a pure play travel business, trading from 1,200 stores as WH Smith across 32 countries and including major airport locations, hospitals and rail stations in the UK.

All the high street stores, colleagues, assets and liabilities will move under Modella Capital’s ownership and will be led by Sean Toal. It will operate for a short transitional period under the WH Smith brand until it rebrands as TGJones. The new owner has said it will keep the Post Office outlets that operate in many branches.

Travel now accounts for 75% of the WH Smith group’s revenue and 85% of its trading profit.

The high street business is profitable and cash generative. The business currently employs c.5,000 colleagues across c.480 stores in primary locations across the UK and from its Swindon based Support Centre.

The transaction is expected to complete in the final quarter of the group’s current fiscal year, with anticipated gross cash proceeds of £36m at completion.

The sale does not include the group’s personalised online greeting card business, funkypigeon.com. The group will explore strategic options for this division, including a possible sale.

Carl Cowling, group chief executive, commented: “As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WHSmith as we become a business exclusively focused on Travel.

Greenhill & Co. International and Herbert Smith Freehills are acting as financial adviser and legal adviser to the group on the transaction.

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