HMV set to buy Ottakar's


The HMV Group has today announced that its has agreed to buy book store chain Ottakar's for £62.8 million.

The music and books retailer, which already owns Waterstone's book stores, said it would pay 285 pence a share for the specialist book chain.

A statement released by the two companies stated that Ottakar's directors had been advised that the offer was "fair and reasonable" and intended to recommend that the company's shareholders accept the deal in the absence of a higher takeover bid.

News of the planned deal comes just two weeks after Ottakar's rejected a previous approach by HMV.

HMV first bid for the book chain last year, but its £96.4 million takeover offer lapsed after being referred to the Competition Commission.

The regulator gave the go-ahead for the retailer to make a further bid earlier this month, but HMV reduced the value of its offer in light of Ottakar's falling sales.

The undisclosed offer, reported to value Ottakar's at about £63 million was subsequently rejected by the company's board.

Commenting on HMV's latest bid, Ottakar's chairman Phillip Dunne said the company's board had decided to accept the offer against a background of challenging trading conditions within the book market.

"Over the past year the book market has undergone a significant change with new levels of competition from the supermarkets and online retailers impacting all specialist booksellers and in particular those with insufficient scale to compete on equal terms," said Mr Dunne.

"Against this background, and given the costs and risks associated with implementing the necessary restructuring programme to compete longer term, the board of Ottakar's believes that the offer is fair and reasonable," he added.

HMV chief executive Alan Giles said the proposed acquisition was expected to enhance earnings within the first year and that Ottakar's business would benefit from the use of Waterstone's sophisticated stock management systems, allowing the retailer to offer a wider choice of titles.

"The strategic rationale for the acquisition of Ottakar's is now stronger than ever," said Mr Giles.

"A combined Waterstone's and Ottakar's business will create an exciting, quality bookseller, able to respond better to the increasingly competitive pressures of the retail market," he added.

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