HIGH street bookseller WH Smith has moved to fend off the threat from on-line retailing by snapping up Europe's biggest internet book retailer, writes David Duffy.

WH Smith is paying £8.8m for bookshop.co.uk, parent company of Oxford-based The Internet Bookshop, which offers 1.4 million books for sale to customers on the internet across the world.

Based at Pony Road, Cowley, its catalogue lists 1.4 million books, 50,000 CDs, videos and computer games and last September it added 400,000 US titles to its database.

Bookshop.co.uk was formed in 1992 by Darryl Mattocks as an information technology consultancy and began trading on the Internet in 1994.

Three years later its shares were listed on the Ofex market for small, growing companies.

Last year it had sales of £2.1m - four times higher than the sales in the previous year.

Bookshop.co.uk chairman Simon Preston said: "The offer by WH Smith is an attractive one for our shareholders, unlocking the value of bookshop.co.uk.

"In addition, becoming part of WH Smith Group will offer the bookshop.co.uk businesses and our employees a good opportunity for growth."

WH Smith chief executive Richard Handover said: "The electronic commerce market is currently relatively small, but we expect it to develop significantly over the next few years. "The WH Smith brand has good potential to trade competitively in this market, particularly as the customer base broadens."

Under the terms of the agreed deal, WH Smith is offering 265p cash per share, against 85p per share on Friday.

Mr Handover added: "We are planning to develop in electronic commerce in a way which will be complementary to our strengthening retail stores chain, which will continue to have a major long-term role.

"In addition, we also plan to grow the existing Internet Bookshop business and realise the benefits of the opportunities it has created.

"We do not expect there to be significant financial returns from this area in the short-term.

"However, the company expects to achieve good long-term returns from the investment being made.

"This acquisition will be an important part of our strategy for achieving a successful future for our brand."

WH Smith said the on-line market for books was estimated at around £200 m, expected to grow to £800m by the year 2000.

And it stressed that stores retailing would continue to have a major long-term role in its future.

The deal marks the latest stage in the group's turnaround following last year's takeover approach by Tim Waterstone, which, although it was rebuffed, put the City spotlight on WH Smith's performance and triggered a massive restructuring programme.

And it comes just weeks after WH Smith's £68m purchase of the high street stores of its rival John Menzies and the £300m sale of its specialist bookshop arm, Waterstone's to a consortium including EMI and Mr Waterstone's, the chain's founder.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.