HMV Group has reacted coolly to a proposal to buy its U.K. bookseller chain Waterstone's. Waterstone issued a statement to the London Stock Exchange which said that an "indicative offer for Waterstone
HMV Group has reacted coolly to a proposal to buy its U.K. bookseller chain Waterstone's.
Waterstone's was launched by bookseller Tim Waterstone in 1982 and has been owned by HMV since 1998.
Waterstone issued a statement to the London Stock Exchange yesterday (April 24) which said that an "indicative offer for Waterstone's of up to £280 million ($500 million) has been put to the board of HMV Group plc."
However, an HMV spokesman tells Billboard.Biz that, as of today, "no formal proposal has been received." He adds: "We'll consider that as and when it arrives."
The LSE statement was made by Waterstone and veteran book publishing executive Anthony Forbes Watson, chief executive of Penguin Group U.K. until February 2005.
It says the offer is made on behalf of private equity interests and a new company to be formed under the chairmanship of Waterstone with Forbes Watson as chief executive. It adds that "in principle" bank finance has been obtained.
An HMV Group statement to the LSE yesterday noted that Waterstone had first made his interest in acquiring the Waterstone's business to the HMV Group board in February 2006. However, Billboard.biz understands his February letter to the board contained no information on how such a bid would be financed.
Waterstone, 68, is chairman of U.K. retailer Chelsea Stores, which groups together five-strong children's department store chain Daisy & Tom and the Early Learning Centre chain, which has 215 U.K. outlets and 50 international stores.
The bid would be the latest in a series of attempts by Waterstone to buy back the company he sold to newsagent/bookseller/stationery chain WH Smith in 1989.
He first made an unsuccessful bid to buy it back from WHS in 1997. When HMV Media Group was launched in 1988 as a joint venture between EMI Group and venture capital company Advent International, it bought Waterstone's from WHS for £300 million ($480 million at 1988 rates) and Waterstone was named HMV Media Group chairman.
However, he left HMV Media Group in 2001 after unsuccessfully attempting to buy Waterstone's back from the entertainment retailer, which became HMV Group plc through a public flotation in 2002.
Waterstone and Forbes Watson said in the April 24 statement that their offer was subject to HMV not acquiring or offering to acquire rival bookselling chain Ottakar's plc, and "may be withdrawn in that eventuality."
On March 30, the U.K. government's Competition Commission gave provisional clearance for a proposed acquisition of Ottakar's by HMV. The bid had been referred to the CC by regulator the Office of Fair Trading on Dec. 6 2005. The commission is required to publish its final report by 22 May 2006. HMV's initial offer for Ottakar's lapsed upon referral to the CC.
In the April 24 statement, Forbes Watson said: "We believe it would be a mistake for HMV to acquire Ottakar's. Recovery at Waterstone's is the priority and the acquisition of Ottakar's would present a perilous distraction from this objective."
Some sources remain skeptical of the Waterstone-led bid, however. Notes one: "The U.K. book trade has changed massively since Tim Waterstone ran Waterstone's. It's a much more cut-throat business now."
HMV Group shares rose from 171.25 pence ($3.05) to 178 pence ($3.18) on April 24, before falling back slightly to 177.5 pence ($3.17) in morning trading today.