In a deal worth roughly $400 million, the French publishing group Hachette Livre has bought U.K. publisher Hodder Headline from beleaguered high street book and newspaper retailer WH Smith. Hachette completed the deal after barely two months of negotiations with WH Smith, which is divesting itself of noncore businesses. Hachette, part of the Lagadere Group, has been steadily acquiring British publishing houses and already owns Orion, Octopus, Watts and Chamber Harrap. It had been considered the favorite to land Hodder, and, with the purchase, Hachette will control about 13% of the U.K. consumer publishing market.
Hachette will pay £210 million in cash to WH Smith and assume £13 million of Hodder Headline's net pension deficit. Hodder's net assets were valued at £256 million a year ago and operating profit was £19 million on sales of £144 million. WH Smith paid £185 million for Hodder Headline in 1999.
A new supervisory board, Hachette UK Book Group, will be set up for all the U.K. Hachette companies. The chairman will be Arnaud Nourry, president and director general of Hachette Livre; Tim Hely Hutchinson, CEO of Hodder, will be the board's chief executive; deputy chief executive will be Peter Roche, CEO of Orion; and Pierre de Cacquerary will be finance director.
Hely Hutchinson, who set up Hodder with venture capital in 1986, has been reassuring his 800 staff that a major reorganization will not follow the sale. "Hachette Livre has a philosophy of decentralised, entrepreneurial management... its many publishing houses are separately managed and the plan for Hodder Headline and the other Hachette UK book businesses is in keeping with this philosophy, " Hely Hutchinson said.
The Hachette U.K. businesses will constitute the second largest general consumer books publisher in Britain, trailing only Random House. In a statement, Nourry said, "We will work with Tim and the whole team to achieve market leadership in both consumer and educational publishing."