Russian tycoon Alexander Mamut is to buy bookseller Waterstone’s from entertainment group HMV for £53m in cash and has drafted in Daunt Books founder James Daunt to run the business.
HMV said that the sale, to acquisition vehicle A&NN Capital Fund Management was “an important step towards strengtheneing the capital structure of the remaining HMV Group”.
James Daunt, founder of Daunt Books, has been hired as managing director.
Tim Waterstone, who had been involved with Mamut in putting together a deal for the book chain he founded, was not involved in the purchase and will have no involvement with Waterstone’s going forward, it is understood..
Current Waterstone’s managing director Dominic Myers will return to HMV after the deal.
The deal, subject to approval including from the Pensions Regulator and the HMV’s lenders, is expected to be completed by the end of June.
HMV chief executive Simon Fox said: “Having fully explored the options available to it, the board believes that a sale of Waterstone’s to Alexander Mamut provides a good new home for the business.
“We expect this deal to enable the group to achieve a reduction in borrowing requirements, and, in turn, focus on plans for transforming the Group into a broad-based entertainment business.
“Waterstone’s is a great business with high quality people who have tremendous passion for bookselling. The goup is grateful for their contribution and wishes the team continued success. I am confident the deal will enable Waterstone’s to go forwards and to remain at the heart of bookselling in the UK for a very long time to come.”
Mamut said: “We are extremely pleased to have reached an agreement to acquire Waterstone’s and its great heritage. 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. I look forward to working with its booksellers in preserving Waterstone’s traditions and I am equally delighted that we will have in James Daunt an MD who shares my belief that Waterstone’s future success lies in an undiluted commitment to books and bookselling.”
Daunt, a former investment banker, will review the Waterstones business before “refining” strategy. He said: “I look forward to working with the Waterstone’s team an in particular to the challenge of restoring a faith in excellent bookselling to the heart of the business.”
HMV reported continued tough trading in the 17 weeks to April 30, when group like-for-likes, excluding live music operations, fell 12.1%. At the eponymous music stores in the core UK and Ireland market, like-for-likes slid 15.1%. At Waterstones the like-for-like decline was 8.4%.
Pre-tax profits for the year to April 30 are expected to be about £28.5m and year-end debt to be about £170m.
The need for HMV to cut short-term borrowing in order to be able to refinance was prompted the decision to sell Waterstone’s, which has 296 shops.