W H Smith has agreed to buy travel retailer InMotion, for $198m (£155m).
InMotion is a retailer of digital accessories in US airports, and W H Smith said the purchase would allow it a scaleable platform to launch the retailer's airport format in to the US, "the world's largest travel retail market for news, books and convenience products."
Established in 1998, InMotion has a concession portfolio of 114 stores across 43 airports in the United States, with a presence in 22 of the top 25 busiest US airports. The purchase doubles the size of W H Smith's international travel business, the company said.
W H Smith group chief executive Stephen Clarke said: "InMotion is a highly successful pure play travel retailer in the world's largest travel retail market. The acquisition of InMotion is an exciting value creation opportunity for the WH Smith Group and marks a major step in our international travel retail growth strategy. It doubles the size of our international travel business and provides us with attractive growth opportunities.
"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 W H Smith 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 is run by a very experienced senior management team and we look forward to working with the CEO, Jeremy Smith, and his team to further develop both businesses across North America and other territories."
InMotion sells a range of digital accessories including headphones and earbuds, travel accessories, mobile power, portable speakers and action cameras. In the calendar year to date, InMotion has delivered like-for-like sales growth of 13%, following like-for-like growth of 12%. For the financial year ending 31 December 2018, InMotion is expected to deliver sales of approximately $166m (£130m) and EBITDA of approximately $23m (£18m).
W H Smith said the purchase was consistent with its strategic priorities, with International Travel forming a key part of the Group's future growth and value creation opportunity.
InMotion will continue to operate as a standalone business as part of WH Smith's international travel business. The senior management team of InMotion will continue to lead the business, including Jeremy Smith, who has been c,e,o. for 12 years.
W H Smith said: "Following the Transaction, WH Smith will benefit from InMotion's existing infrastructure and business development capabilities, to support the launch and growth of WH Smith's airport format in North America. In addition, the Transaction provides additional opportunities to grow the digital accessories format in key markets outside of North America where WH Smith is present.
To support the transaction, WH Smith has put in place a new four year term loan of £200 million provided by the Group's four existing facility banks, Barclays Bank PLC, BNP Paribas, HSBC UK Bank PLC and Santander Corporate & Investment Banking, at Libor +100 bps. In addition, WH Smith's existing revolving credit facility of £140m has been extended for a further year and now expires in December 2023.
Completion of the deal is expected before the end of 2018.
W H Smith also said it had made a good start to the new financial year, with its Travel total revenue up 10% with like-for-like revenue up 4% in the last eight weeks. High Street total revenue is down 1% and like-for-like revenue is down 2%. Total revenue for the Group is up 5% with like-for-like sales up 1%.