KATE SWANN, chief executive of WH Smith, announced in April that she planned to split the company in two, separating the retail division from news wholesaling (which delivers newspapers and magazines to other newsagents and supermarkets).

Nick Bubb, retail analyst at Evolution, who was recently briefed by the company, has told clients that he believes the separation could come within a couple of months, a lot quicker than many in the City had expected.

Despite her successful track record at Argos, when Swann arrived at WH Smith in November 2003 few observers had much faith in her ability to turn round the company, a troubled and mature business.

But Swann has proved the doubters wrong and has got to grips with a business that had been mismanaged and badly led for years.

She has cut costs and refocused the high-street retail business on its core strengths: books, stationery and news. A new format has also been developed for its “travel” business — outlets at airport and railway stations, where sales are growing.

Yet the transformation of WH Smith has yet to be reflected in the share price — partly because Swann and her advisers are bizarrely reluctant to talk about her strategy or her achievements. In an industry where chief executives are rarely lacking in ego, Swann appears reticent almost to the point of shyness.

But Merrill Lynch hopes that the splitting of the two businesses will highlight the undervalued group and in particular the “miserable rating” of the retail business.

Shares in WH Smith closed at 461¼p on Friday, but Mal Patel at Merrill Lynch believes that on the basis of a sum-of-the-parts valuation the shares should be trading at closer to 548p.

GW Pharmaceuticals

SHARES in GW Pharmaceuticals closed this week at 72p — close to an all-time low. I warned in January that the City’s confidence in GW Pharmaceuticals and its chairman, Geoffrey Guy, was fading fast. Since then the shares have almost halved — destroying £80m of shareholder value in only six months.

Collins Stewart brought the company to the stock market in June 2001. With a cannabis-based treatment for chronic pain — Sativex — the firm secured acres of positive coverage.

But it has been a roller-coaster ride for investors. The only people to have made any real money have been the firm’s City advisers and the short sellers — traders who sell shares they do not own in the hope of buying them back at a lower price later and banking the difference.

When it floated, GW boasted that Sativex would be approved and on sale by 2004 — but shareholders are still waiting. Having failed — so far — to gain approval in Britain, Guy has hinted that he may now look to gain approval elsewhere in Europe.

A number of City analysts are increasingly confident that Guy will, eventually, be successful. If he does manage to gain approval for Sativex, the shares will soar.

But having failed to deliver on a number of occasions, persuading the City that this time is different will be no easy task.

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