Retailer WH Smith is selling its distribution division – Britain’s biggest wholesaler of newspapers (33% market share) and magazines (36%) – to ABN Amro Private Equity for £215 million.

The unit is in negotiations with its customers and suppliers about transferring contracts to the new owner. However, the recently renegotiated deal with Frontline – the division’s biggest contract – is said to include a clause allowing automatic transfer. Frontline represents magazine publishers such as Emap, BBC Magazines and Haymarket.

Nevertheless, other contracts cannot be automatically handed over to ABN Amro. WHS said it was “confident” it could reach an agreement with its partners, despite threats from some publishers such as Daily Mail & General Trust and Associated Newspapers that contracts may be terminated.

ABN Amro – whose management team is led by former WHS operations director Terry Reilly – fought off rival bids from private-equity firms JP Morgan Partners, Electra and 3i. WHS decided to sell the unit in March [WAMN: 05-Mar-01], following a distribution row last year with several publishing groups.

News sources: Financial Times; The Times (London)