Smiths News (LSE:SNWS) shares have risen 6.2% to 67.3p after winning a national News UK distribution contract worth £125m a year.
The deal, described by the company as transformational, expands the territories in which Smiths News acts as News UK's exclusive wholesale distributor to cover all of Great Britain and extends the contract term to July 2037, eleven years from now.
Smiths News, the UK's largest news wholesaler, will incur one-off implementation costs and early-life transition costs during its 2027 financial year as it builds out the enlarged national network ahead of the July 2027 handover date, but the company expects the expansion to generate a return on invested capital above its hurdle rate and be earnings accretive from 2028 onwards.
The contract also commits Smiths News to freezing delivery service charges for retail customers for the life of the agreement.
"This deepens a relationship spanning more than 50 years, securing a reliable and sustainable national route to market for retailers and consumers," said chief executive Jonathan Bunting.
The board intends to provide fuller financial guidance on the contract's effects at its preliminary results on 4 November.
