Card Factory has agreed to acquire the online personalised greetings card and gift retailer Funky Pigeon from WH Smith for £24 million, marking a significant shift in both companies’ strategies.

Funky Pigeon, which operates from Bristol and Guernsey and specialises in personalised cards and attached gifting services, has generated average annual sales of £32 million and around £5 million EBITDA over the past two financial years. The deal, which values Funky Pigeon at an enterprise value of £26 million, is expected to complete before the end of the year, subject to regulatory approval.

Card Factory, which runs over 1,000 stores across the UK, said the acquisition would accelerate its digital strategy by providing a platform for online growth in the direct-to-recipient card and gifting market. The company expects Funky Pigeon’s technology to become the core digital offering for its UK and Ireland business over time.

Darcy Willson-Rymer, Card Factory’s chief executive officer, said: “This acquisition marks a significant step forward in Card Factory’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.”

He added: “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.”

The deal follows a strategic review by WH Smith, which has chosen to focus on its travel retail business. The company has recently sold its high street retail division to Modella Capital, and now plans to operate primarily in airports, train stations, motorway service stations, and some hospitals. WH Smith described itself as a “pure play global travel retailer” targeting growth opportunities in key markets.

Card Factory said it plans to use operational efficiencies by integrating Funky Pigeon’s order fulfilment in Guernsey with its own facilities in Baildon, West Yorkshire. The company’s expectations for mid-to-high single-digit sales and adjusted pre-tax profit growth in the next financial year remain unchanged.

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