Waterstone wins his books empire back
Thursday 26 February 1998
Tim Waterstone, who started book selling with a pounds 10,000 loan from his father-in-law, has formed a joint venture with electronics and leisure giant EMI and bought his old Waterstone's chain back from WH Smith. He sold 31 Waterstone's stores in 1989 for pounds 42m - a deal which netted him a pounds 9m profit.
As chairman of the new company, HMV Media, he will now control 106 Waterstone's shops which last year made a pounds 20m profit on a pounds 200m turnover. He will also try to apply his touch to the HMV music stores and Dillons book shops which come with the EMI part of the deal.
Electronics and recording giant EMI has been trying to pull out of retailing for some time to concentrate on the recording industry. It has now effectively ceded control to Waterstone and his private company, Advent.
The new company will compete with WH Smith as one of the country's biggest book and record retailers. The irony is that so much of Mr Waterstone's career has been intertwined with the WH Smith empire. He joined WH Smith in 1973 and was fired in 1981 after he set up an American operation that lost money. When he left his boss told him: "I suppose we'd prefer it if you didn't open a chain of book shops."
In fact, he used his redundancy money to open book shops that were much bigger than any seen in Britain before. They had a spacious feel that encouraged customers to linger and come back. His was one of the archetypal Eighties entrepreneurial success stories, but unlike the founders of Next and the Sock Shop the bubble did not burst and he sold a heavily indebted chain to WH Smith just before interest rates rose.
Last year, he founded a children's store, the Daisy and Tom children's shop in Kensington, west London, which he plans to float on the stock market. In keeping with the book shops, the children's venture is named after his three-year-old daughter and his business partner's son.
In a fiendishly complex deal, EMI bought Waterstone's from WH Smith for pounds 300m then sold it, its 78 Dillons stores and 271 HMV stores to the joint venture it created with Tim Waterstone for pounds 500m. The City welcomed the deal by marking up EMI shares by 15p and WH Smith shares by 5p after the news broke. EMI said there would only be a small number of book shop closures because of the merger; regulatory approval will be needed for the deal to go through.
The Dillons stores that form the deal are likely to be re-branded as Waterstone's and the whole company will be floated on the stock exchange in a few years.
`Rival bid' for Waterstones,
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