Waterstone bid for books chain poses threat to Ottakar's

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The Independent Online

Tim Waterstone is mounting his third attempt to regain control of the Waterstone's bookstore chain he founded nearly 25 years ago. He has offered to buy the group from HMV for £280m on one proviso: that the music retailer drops its plans to merge Waterstone's with Ottakar's, its smaller rival.

This latest endeavour comes hard on the heels of Permira's failed £842m takeover approach for HMV, which was rebuffed. It leaves a question mark over the future of Ottakar's, which has been left in limbo by HMV's advances after the competition authorities intervened. WH Smith is also thought to be circling Ottakar's, which is the smallest of the national book chains.

Mr Waterstone has teamed up with Anthony Forbes Watson, who used to run Penguin UK, to make his offer, which is worth up to 70p a share. Lazard European Private Equity Partners is backing the offer and has lined up bank finance. Shares in HMV rose 6.75p to 178p, while Ottakar's dropped 6.5p to 340.5p.

"We are laying our cards on the table and saying 'please, let's deal'," Mr Waterstone said. He stopped short of describing his move as "hostile", but said he was appealing to HMV's shareholders because he had not heard from the music group since contacting them about a bid in February. Waterstone's makes about one-quarter of HMV's total profits so Mr Waterstone's proposal would not be considered especially ungenerous. He is keen to act before HMV tables a fresh offer for Ottakar's, which it will be free to do once the Competition Commission has published its full report on the proposed deal.

In a statement issued after the market shut, HMV said it had "yet to receive a formal proposal". But it was careful not to reject the offer outright, promising to "always give proper consideration to any proposal that might enhance value for shareholders".

Mr Waterstone launched an attack on the Waterstone's management and claimed the chain had lost market share. "It really depresses me that it has seriously lost its way. It is not being well run and its results are truly awful. It needs to get back to ... being the best bookseller in the world."