A prominent activist investment firm has started acquiring a stake in WH Smith, the travel retailer, shortly after divesting its historical high street division. Palliser Capital has reportedly purchased nearly 5% of the London-listed company, valued at approximately £65m based on the current share price. The stake is anticipated to be publicly disclosed at an industry conference on Thursday afternoon.
Palliser, known for its recent efforts to push Rio Tinto to delist from London in favor of Australia, holds a positive view of WH Smith’s management team, led by CEO Carl Cowling. The investment firm believes that implementing self-help measures could enhance returns for WH Smith shareholders. These measures include reassessing the travel retailer’s leverage targets and capital allocation policy to optimize its balance sheet. Additionally, Palliser aims to improve investor communication and disclosure, as well as revamp the executive incentive structure to better align with shareholder interests.
Despite WH Smith’s shares still trading at levels similar to their lows during the COVID-19 pandemic, Palliser sees potential for growth, particularly in the US market. The investment firm believes that WH Smith’s shares could nearly double in value over the next three years.
WH Smith recently made the decision to sell off its town center business, established in 1792, which was seen as a significant symbol of the decline of the British high street. The unit, comprising around 480 stores and approximately 5,000 employees, was acquired by Modella Capital and is undergoing rebranding as TG Jones.
As of Thursday afternoon, WH Smith’s shares were trading at about £10.60, reflecting a decrease of over 10% in the past year and giving the company a market capitalization of £1.36bn. Palliser, which successfully challenged the board of London-listed Capricorn Energy, declined to provide a comment. WH Smith has been reached out to for a response.
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