Ottakar's has rejected a renewed bid by the music retailer HMV to gain control of it. HMV, which bid £97m for the bookseller in September, received regulatory approval for a takeover last week.
Ottakar's rejected the advances of HMV, saying the new bid "is materially below the current market price". It did not disclose the price HMV had offered but it seems HMV is playing hardball. Ottakar's said discussions between the two are ongoing, despite the rejection.
Shares in Ottakar's shed 25p to close at 303p yesterday. The decline reduced its market capitalisation to less than £67m compared to £72.3m at the start of the day. HMV's original bid was lodged at 440p a share. In August, Ottakar's management tried to buy out the business at 400p a share.
There is still a chance a bidding war could emerge, with the stationery store WH Smith considered a potential suitor. It has not declared whether it will pursue a bid.
Nick Bubb, a retail analyst at Evolution Securities, guessed the latest bid had been pitched at 250p or lower to reflect the poor state of the business. He said Ottakar's is not in a great negotiating position but expects a renewed bid of 300p to have a good chance of succeeding. Evolution, which rates Ottakar's as a stock to sell, cut its price target to 260p from 300p.
HMV wants to merge the 141 Ottakar's bookstores with its own book chain, Waterstone's. After gaining regulatory approval last week, HMV said there was a strong strategic rationale for buying Ottakar's, given the threat posed by online retailers and supermarket chains such as Tesco.
HMV took control of its online sales channel last week, ending a five-year relationship with the online retailer Amazon.