Smiths News has expanded its books distribution business with the purchase of Dawson Holdings, and analysts believe more deals are on the cards.
The company is paying 17.722p a share for Dawson, a total of £20m, pushing its target's shares up 3p to 17.25p. Two years ago Smiths - up 2.75p at 96.75p - bought Dawson's news and magazine businesses. Andy Murphy at Singer Capital Markets said:
This deal looks positive and is enhancing to Smiths. However, we believe it could be the first of a number of deals as the total cost is £20m and we believe Smiths 'war chest' is significantly larger.
Charles Stanley said:
Dawson Books, the largest division makes for a good strategic fit, bolstering Smiths Bertram's division and compensating for a decline in revenues generated from its library services division. Dawson's eBook platform also provides access to an established digital platform, an area where Bertram's had little exposure. We view this as a small step forward. The market are expecting a more significant and transformational acquisition as part of the group's revenue diversification strategy.
