British travel retailer WH Smith has agreed to sell its online personalised greeting card subsidiary, Funky Pigeon, to UK-based retailer Card Factory for £24m ($32.1m) in cash.
The consideration is based on an enterprise value of £26m. The company expects to generate £21m in net cash proceeds after accounting for transaction expenses.
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These funds will be allocated to reducing WH Smith’s overall debt.
The transaction aligns with WH Smith’s strategy to concentrate on travel retail.
Having transformed into a “pure play global travel retailer”, the company is poised to seize significant growth prospects in its primary markets and boost shareholder value.
The transaction is expected to be completed by the end of 2025.
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By GlobalDataThe acquisition will strengthen Card Factory’s digital strategy, positioning it as the second-largest online card and gift retailer in the UK.
It is expected to be earnings-enhancing for Card Factory in the financial year ending 31 January 2027, with anticipated synergy benefits exceeding £5m.
These will be realised through optimised manufacturing and fulfilment, technology platforms and product ranging.
Card Factory plans to fund the acquisition through a drawdown of up to £35m under its accordion facility, with a modest expected increase in leverage.
Funky Pigeon’s established online presence and customer base, supported by its teams in Bristol and Guernsey, have generated £32m in annual revenue and £5m in earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the financial years 2023 and 2024.
Cardfactory aims to integrate Funky Pigeon’s digital platform with its current omnichannel capabilities, using its 24 million unique in-store customers to establish a robust online presence in the celebration occasions market.
The digital strategy includes enhancing the online customer experience and extending the in-store party and celebrations offer through an omnichannel approach.
Card Factory aims to integrate Funky Pigeon’s technology platform as the core digital platform for its UK and Ireland business, driving operational efficiencies and improving customer experience.
Card Factory CEO Darcy Willson-Rymer stated: “This acquisition marks a significant step forward in cardfactory’s strategy to build a scaled, competitive digital presence in the celebration occasions market. It brings a high-quality platform and proven technology, accelerating our ability to compete in the direct-to-recipient card and gifting segment, so supporting our ambition to become the leading omnichannel retailer in our sector.
“Together, the enlarged customer base will benefit from a richer, more convenient customer proposition, combining the strength of our nationwide store estate and wider celebrations offer with Funky Pigeon’s exceptional digital experience. Operational efficiencies, fulfilment synergies and a unified technology platform will provide the data needed to develop deeper insights into the customer journey, enabling us to build a stronger, more integrated omnichannel business.”
