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One of the UK’s biggest suppliers of school stationery and equipment has been sold in a deal netting a £38 million windfall for its management.

Smiths News, the UK’s biggest newspaper and magazine distributor, will take on the brands The Consortium and Early Years as part of a deal for Trowbridge, Wiltshire-based Hedgelane, which employs 260 people.

Chief executive Melanie Teal, chief operating officer Mark Barnett, finance director Mike Gahan and business support director Joe Caddell will get an initial £32 million for their shares – rising by £6 million if conditions are met – but will stay on to run the 40-year-old company.

Smiths News

Swindon-based Smiths News, which was demerged from retailer WHSmith in 2006, said the deal will help it expand beyond newspapers and magazines, which have seen sales decline in recent years.

Smiths chief executive Mark Cashmore said the deal was a “significant step forward” in its diversification strategy.

It bought wholesaler Bertram in 2009, which has 45% of the wholesale book market, and snapped up academic books specialist Dawson last year.

Meanwhile, Smiths said underlying profits rose 12% to £21.5 million in the six months to February 29, on revenues up 2.4%.

Its newspaper market saw sales decline 1.2% but this was better than the 3% fall seen a year ago. The improvement was driven by 14 titles putting up their prices, pushing average prices up 6%.

The new edition of the Sun on Sunday meant there had been no significant fall in its market following the closure of the News of the World in the wake of the phone hacking scandal. The group’s like-for-like newspaper sales were down 1.2%, while magazine sales fell 7.8%.

Smiths hopes the Olympics, the Queen’s diamond jubilee and the Euro 2012 football championships will boost sales in its second half.

The Press Association