Retail group WH Smith has confirmed plans to split its news distribution arm and retail business.
After posting a three per cent drop in like-for-like sales, the group yesterday said it would create two separate stock market-quoted companies.
But chief executive Kate Swann denied she was hanging the For Sale sign over either of the businesses, although she said she had a duty to shareholders to consider suitable offers.
"If somebody wants to put a large amount of money on the table, we will, of course, take that seriously," she said.
WH Smith - which has distribution depots in Birmingham, Edgbaston, Wednes-bury, Stoke on Trent, Redditch, Kidderminster, Worcester and Hereford - last contemplated selling off its 150 year-old distribution arm in 2001.
However, the #215 million deal collapsed after would-be buyer ABN Amro Private Equity looked to negotiate a lower price. Venture capital-ists Electra and 3i were also interested parties at that time.
Division of the businesses would make them both more vulnerable to takeover and analysts are split on whether the move makes sense for the group.
Ms Swann said it would enable "these distinct businesses to benefit from increased focus and to pursue their strategies to maximum effect".
An independent news distribution business would be more responsive to publisher needs and would be able to work more effectively with other retailers, she said.
Ms Swann added that high street retail - WH Smith has around 26 stores in the West Midlands - would be better able to continue its recovery plan. The announcement came alongside half year results showing pretax profits were up four per cent to #71 million, in line with market expectations.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "While the results have seen a continued improvement in profitability despite a tough trading backdrop the positive share price reaction is all about the perceived enhancement to overall shareholder value as the news distribution business is to be demerged."
However, Richard Ratner, analyst at Seymour Pierce, cautioned the sum of the parts could be less than the sum of the whole "or at best no more".
"Remember that last time it was put up for sale, the price was chiselled down by ABN Amro to sub #200 million and the deal fell through," he said.
The newsagent and bookseller blamed the tough trading environment for the drop in like-for-like sales to #1.3 billion for the six months to February 28.
WH Smith said that in the six weeks to April 8 like-for-like retail sales were down three per cent while news distribution sales rose one per cent but said trading was affected by the timing of Easter this year.
City analysts expect full-year profits to come in at #79 million, up from #73 million last year.
Ms Swann said WH Smith's strategy of focusing on more profitable sales had not changed and her aim was to make WH Smith "Britain's most popular bookstore and newsagent". No timetable has been set for the demerger.
"It's a complex issue separating the two businesses, with a number of things that we need to work through," Ms Swann said.
"We've looked at those, don't believe there are any show stoppers, but it is complex and we don't want to commit to a time until we are absolutely certain we can deliver on that."
WH Smith has been criticised in the past for lacking a distinct retail identity with specialist retailers such as HMV, Waterstone's and Ottakar's offering a far wider range of music and books while online retailers such as Amazon have also eaten into its sales.