Analysts predicted that competition for Ottakar's, tipped to come from HMV, which owns Waterstone's, and WH Smith, could push the value of a bid up to as much as 400p per share, or £88m. Shares in Ottakar's rose 4 per cent to 332.5p on the speculation, although shares in HMV and WH Smith slipped on fears that either could end up overpaying for the UK's No 3 book retailer.
Yesterday formal clearance from the Competition Commission (CC), which followed a six-month investigation, gave HMV a three-week window in which to decide whether to table a fresh offer for Ottakar's according to Takeover Panel rules.
HMV's original 440p-per-share bid, made in September, lapsed when the Office of Fair Trading ordered a full competition investigation in December after intense lobbying from authors and publishers who argued that consolidation threatened the future of the UK book market.
The CC report dismissed their fears as misguided, for example saying that Waterstone's and Ottakar's had similarly centralised approaches to deciding which titles to stock in local stores. "The degree of centralisation in the choice of range at Ottakar's, and the degree of local flexibility in range at Waterstone's, ran contrary to public perception," it said.
The inquiry also rejected suggestions that there was a regional competition issue in Scotland. "The merger would not lead to a substantial lessening of competition in the market for the retail sale of new books to consumers in any part of the UK," the CC said.
The report revealed that "other interested parties" had approached Ottakar's about a possible bid both when HMV tabled its offer and when Ottakar's received its original management buyout last August, which spurred Waterstone's into action. WH Smith is thought likely to enter the fray because it has plans for its own stand-alone book chain. The stationery retailer has identified scope to open up to 100 separate bookstores if a trial proves a success.
Alan Giles, HMV's chief executive, said this week that the strategic rationale for buying Ottakar's was "if anything even stronger" than in September because of the increased threat posed to specialist booksellers by internet-based rivals and supermarkets. If no competing bids appear, analysts expect HMV to return with an offer about 350p per share.