HMV Group, owner of Waterstone's bookstores, will buy Ottakar's bookstores for 285 pence a share (about US$118 million), 35% less than its original 440-pence-per-share offer last September, Bloomberg reported. HMV said it already has control of 41% of Ottakar's stock, which could lessen the chance of a competing bid from WH Smith or others. HMV's original offer expired during the long period of review by the Competition Commission, which ultimately approved the sale.
If the deal is concluded, the "Wattakar's" combination would have 336 bookstores and represent 24% of the U.K. book market.
Under pressure from grocery store chains and Internet booksellers, sales at traditional bookstores in the U.K. have eroded in the past year. Last week Ottakar's said sales at stores open at least a year fell 8% in the 16 weeks ended May 20. Sales at Waterstone's in the similar period dropped 5.6%.
"The strategic rationale for bringing the two businesses together is stronger than ever," HMV CEO Alan Giles said during a conference call quoted by Bloomberg. Giles said that HMV will benefit from economies of scale and the consolidation of "administrative and head office functions."
From Shelf Awareness