WHSmith has ended talks about buying troubled bookseller Borders UK, raising doubts over the specialist’s future.
Borders was approached by WHSmith last week, but it has not proved possible to strike a deal and talks were terminated this morning. An alternative buyer of Borders is being sought and the retailer is understood to have received several expressions of interest.
Borders has battled to carve out a profitable position in the book retail market as grocers devote more attention to the category, sales increasingly transfer to online giants such as Amazon and HMV-owned Waterstone’s occupies the leading high street position.
The end of talks with WHSmith adds to the pressure facing Borders. Last week, a Borders supplier issued a winding up petition against the bookseller. That has since been withdrawn, but illustrates Borders’ difficulties.
In July, Borders UK chief executive Philip Downer bought the business from tycoon Luke Johnson’s private equity business, Risk Capital. Downer was backed by Valco, the private equity arm of restructuring specialist Hilco. It is understood that Valco has since increased a loan to Borders from £5m to £8m and Borders is not in breach of terms on that loan.
Johnson bought Borders in 2007 for a maximum of £20m, but the retailer struggled. Earlier this year auditor Ernst & Young expressed doubts about Borders’ ability to continue trading.
No comment was available from WHSmith or Borders.