Books etc may bid for Ottakar's

Ottakar's, the struggling book retailer which issued a calamitous profits warning last week, is expected to start talks with potential rescue bidders this week.

Ottakar's, the struggling book retailer which issued a calamitous profits warning last week, is expected to start talks with potential rescue bidders this week.

Books etc and Waterstone's are the most likely suitors as Ottakar's tries to find ways of reducing an £11m debt mountain.

Ottakar's is seen as a good fit with Books etc, which was acquired by the US chain Borders two years go. Still run by Richard Joseph, Books etc has 27 stores and is thought to be interested in expanding the chain. Ottakar's, which is now valued at just £13m, has 70 stores but there is hardly any overlap with the Books etc chain.

Waterstone's might be interested in Ottakar's but has itself been finding recent trading tough.

Its parent company, HMV Media group, is also highly leveraged after the buy-outs of Waterstone's from WH Smith and HMV from EMI.

Ottakar's is pursuing a range of strategic options after last week's warning which wiped more than a third of its value. The company could also look at a re-structuring which would involve the closure of some stores. However, retail experts suggest a trade sale is the most likely route.

Separately, HMV Media would not comment yesterday on reports that Tim Waterstone is considering buying back the Waterstone's chain he founded.

Mr Waterstone, who is chairman of HMV Media, is reported to have become frustrated by the delays in the group's planned flotation.

Alan Giles, chief executive of HMV, commented yesterday: "Tim is a significant shareholder and chairman of the company. We are all on course to bring the company to market. But we recognise the equity markets are difficult, particularly for retailers, at the moment."