Music giant HMV, is to sell Waterstone’s for £53million to a Russian billionaire.
It has been revealed today that although the deal is still subject to a number o conditions, it is likely that the high-street bookseller will be sold to A&NN Capital Fund Management.
The company has been struggling in recent months, and must sell the bookshops as part of conditions with lenders.
Owning 731 HMV, Waterstone’s and FORP stores, the group has issued three profit warnings already this year.
With debt of approximately £125million and high street chain are under huge pressure from lenders.
HMV sales still falling
It revealed today that like-for-like sales at HMV’s UK and Ireland stores fell by 18.8 per cent in the 17 weeks to the end of April, while Waterstone’s saw an 11.3 per cent fall over the same period.
Even as the biggest book shop chain in the UK and Ireland, with 296 Waterstones stores and 4,500 staff, it is still finding it tough to stay a float.
Although the banks are supportive of the sale, HMV still has to renegotiate its bank facilities. Pension trustees and the pensions regulator also have to approve.
HMV chief executive Simon Fox said A&NN would be a ‘good home’ for Waterstone’s, while the sale will reduce borrowings and enable HMV to focus on plans for transforming the business into a broad-based entertainment business.
Underlying profits this year will be about £28.5 million, HMV said, down from its previous forecast of £30 million, the fourth time this year it has lowered its profit estimates.
A&NN will appoint James Daunt as managing director of Waterstone’s once the deal completes. Mr Daunt currently runs Daunt Books, a small chain of London-based bookshops he founded in 1990.
He will undertake a comprehensive review of the business and operations of Waterstone’s.
Mr Mamut said: ‘The opportunity ahead to reposition Waterstone’s as a regional and local community-orientated bookseller is an exciting one.
‘The business enjoys a great loyalty from its customers and I believe that there is considerable integrity and value in the brand.’
A&NN, his investment vehicle, already has an interest in a Moscow bookstore chain called Bookberry, as well as Russian publisher Azbuka-Atticus, mobile phone handset retailer Euroset and social network site LiveJournal.
‘This is an important investment from A&NN, which will secure a dynamic future for the UK’s largest bookshop chain,’ added Mr Daunt.