The owner of Hobbycraft is among a pack of suitors circling WH Smith, the 233-year-old high street chain which has been put up for sale.
Sky News has learnt that Modella Capital, whose executives have previously been involved in retailers including Paperchase and Tie Rack, is one of a handful of parties to have held discussions with WH Smith and its advisers.
The likelihood of Modella completing a deal to acquire the 500-store chain was unclear on Monday.
Modella’s executives include Steve Curtis, whose biography on the firm’s website describes his “successful transactions [as including] Jigsaw, Paperchase, Feather & Black, Rolling Luggage and Tie Rack”.
One of the firm’s investment advisers is Jamie Constable, a prominent turnaround investor who is associated with firms including Rcapital, Quilam Capital and Blazehill Capital.
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City sources said that WH Smith – which confirmed at the weekend that it was considering a sale of the business following a Sky News report – was keen to wrap up a deal during the spring.
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The disposal would, if completed, leave London-listed WH Smith as a company focused on its more lucrative travel retail operation in airports, railway stations and hospitals, which comprises about 1,200 stores globally.
Modella is said to be bidding against a number of other experienced retail investors, including the Apollo-backed firm Alteri, which owns the Bensons for Beds chain.
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WH Smith, which is being advised by bankers at Greenhill, declined to comment on Monday, while Modella has been contacted for comment.
A sale of its high street arm would mark a watershed moment for the UK high street, which first saw the appearance of the name in 1792.
The business, which specialises in selling items such as greeting cards and stationery, employs about 5,000 people across the country.
Run by Carl Cowling, chief executive, the disposal of its high street arm and repositioning as a pure-play travel retail company was welcomed by investors on Monday, with shares in WH Smith rising by about 2.5%.
The division recorded flat operating profit of £32m last year, with WH Smith’s travel business accounting for 75% of the company’s revenue and 85% of trading profit.
There have been questions about the future of WH Smith’s high street division for many years amid carnage elsewhere in the sector, with the likes of BHS, Debenhams and Comet all ceasing to trade from physical stores in the last 15 years.
Last week, it emerged that roughly 15 WH Smith shops would be closed this year – part of an annual rationalisation of its store estate.
In 2006, the company’s news distribution arm, now known as Smiths News, was demerged into a separate London-listed company.
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Reiterating its weekend response to Sky News’s report, WH Smith told the London Stock Exchange on Monday:” WH Smith plc notes the recent press speculation regarding its high street business.
“WHSmith confirms that it is exploring potential strategic options for this profitable and cash-generating part of the group, including a possible sale.
“Over the past decade, WHSmith has become a focused global travel retailer. The group’s travel business has over 1,200 stores across 32 countries, and three-quarters of the group’s revenue and 85% of its trading profit comes from the travel business.
“There can be no certainty that any agreement will be reached, and further updates will be provided as and when appropriate.”
