Waterstone 'keen to take back control' of his bookstores

Click to follow
The Independent Online

Tim Waterstone, the founder of the bookshop chain that bears his name, is reportedly mulling a bid to buy back the stores if the current owner, HMV, fails to improve the business by next year. The bid would be valued at £100m or more.

HMV is due to issue an update on trading this week, which will be intensely scrutinised by Mr Waterstone and his advisers. He has apparently assembled backers for his approach, including a contribution from a London-based hedge fund. The deal would take the shops into private ownership again.

Meanwhile, some investors in HMV are said to be keen to see their company offload the books business and realise cash. The first branch of Waterstones opened in 1982 and the successful chain was sold to WHSmith in 1993 and then to HMV in 1998 for £300m. In 2006, Mr Waterstone tried unsuccessfully to buy back his old business for £280m. Sources say he is still keen to regain control of the 300-plus branches and "it is unthinkable that he would not be in the running" if HMV did want to dispose of it.

The bookseller has performed badly recent years, with its latest annual operating profit collapsing from £10m to £2.8m after poor autumn and Christmas sales. Like-for-like sales sank by 6.2 per cent in the year to April, prompting the company to draft in new management in January.

Analysts at Nomura expect HMV to reveal ongoing sales pressure at Waterstones in this week's trading update, although they believe the decline eased to 4 per cent in the first quarter from 4.8 per cent in the previous three months.

Like other bookselling chains, such as Bookers, which went bust earlier this year, Waterstones has suffered from the emergence of internet retailing and the new generation of electronic book readers.