The future of the book-retailing landscape was rewritten yesterday after the independent book chain Ottakar's succumbed to a £62.8m takeover bid from its rival Waterstone's.
To the dismay of authors and publishers, who buried the hatchet to fight against the merger, Ottakar's agreed to the deal, which is expected to see its brand disappear from Britain's high streets. Its acquiescence draws to a close a saga that has stretched back to last summer and involved the country's top competition regulator.
The owner of Waterstone's, the music group HMV, hopes that combining the businesses will provide the clout to withstand the threat posed by supermarkets and online book retailers, such as Amazon. In the past three years, supermarkets have doubled their share of the book market to 8 per cent, as have internet-based retailers, which controlled 12 per cent of the book market last year. Alan Giles, HMV's chief executive, said: "The merger will create a stronger, healthier and more attractive book-selling business."
The new group has become the biggest book chain in the UK, with a market share of 22 per cent. The fate of Ottakar's has been on hold since December, when an outcry from authors hostile to the creation of one book-selling giant prompted the Office of Fair Trading to refer the original Waterstone's bid, made in September, to the Competition Commission. Yesterday's 285p-per-share offer was a blow for Ottakar's investors, who had originally been offered 440p per share to cede control of the group.
Waterstone's slashed the value of its bid to reflect the dimmer future for high-street book chains, which resorted to a price war at Christmas to lure shoppers away from offers available online. Ottakar's was badly damaged in the battle for customers, and issuedprofits warnings and disappointing sales updates.
James Heneage, Ottakar's founder and managing director, said: "The market has shifted inexorably in the direction of supermarkets and the internet. It has therefore made sense for specialists to seek scale." He will make £5.7m from selling the two million shares he owns in Ottakar's to HMV.
Although City analysts have speculated about the possibility of WH Smith entering the fray with its own bid for Ottakar's, that prospect lookedslim yesterday. HMV said it had the backing of shareholders owning 31 per cent of Ottakar's stock. It already has a 10 per cent stake, which means it is close to gaining full approval for its offer.
There was mixed reaction to the prospect of Ottakar's vanishing from the book market. The Society of Authors, which told the competition inquiry its members were "unanimous" in their antipathy to a deal, called on Waterstone's to preserve the culture of Ottakar's. Mark Le Fanu, the society's general secretary said: "We trust that the senior executives of Waterstone's will ensure that, as they have promised, their shop managers will be given more authority and independence than in recent years."
Neill Denny, editor-in-chief of the trade magazine The Bookseller, said: "Publishers will welcome the resolution, if not the outcome, of a saga that has distracted two of their biggest customers for almost a year. The more sentimental will bemoan the loss of a retailer as passionate and spirited as Ottakar's, and the more pragmatic will worry about being charged more for Christmas promotions."
Is this a good thing for Britain's book lovers?
YES: Peter Florence, director of the Hay Festival
I think it's great to have one strong high-street presence committed to top-end literature and bookselling to take on the supermarkets. When you have an overwhelmingly dominant market leader, it creates far more opportunities for quirky, niche, independent booksellers.
Wherever you have real inventiveness you will have great success. There is evidence throughout the country of people setting up in competition to centralised-stock-driven companies and being incredibly successful.
Having two competing national chains has not worked for the past 20 years, be it Waterstone's and Dillon's or Waterstone's and Ottakar's. The market isn't strong enough to support two big beasts. Customers also benefit because Waterstone's is driving downprices.
NO: Andrew Taylor author of The American Boy
It's some consolation that a decision has been made, but like most authors I would be very sad to see Ottakar's lose its independence and the personal touch its stores have. There is a fear that HMV will merge some Waterstone's and Ottakar's shops and centralise buying and marketing.
They will have to because they need to cut costs to compete with supermarkets and the internet. I can see that commercial logic is driving this but I feel huge regret that the book trade has been driven to the point that selling books is almost like selling tins of tuna. The people who will lose out will be book buyers. Even though they will be able to buy a minority of popular books very cheaply, there will be a smaller range, with less regional variety and a less personalised service.
You only have to compare an Ottakar's with a Waterstone's to see the difference.