Bids `on the table' for Waterstone's

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Initial bids to buy Waterstone's are thought to be on the table, with rumours rife that a planned flotation of its parent company HMV Media Group has been scrapped.</p><p>
Chairman Tim Waterstone is believed to have raised between &pound;300m and &pound;350m to fund a bid (The Bookseller, 10th December 1999) to buy back the chain he founded.</p><p>
Borders has been mooted as a possible contender. It has plans to expand its chain of bookshops in the UK, but Philip Downer, Borders managing director, said he was not aware of an acquisition strategy. "We are focused on developing our own stores."</p><p>
Rumours that David McRedmond, former W H Smith US Travel Retail chief executive, had quit his job at Eirecom in preparation for running the chain should Mr Waterstone's bid be successful proved to be completely without foundation.</p><p>
Speculation has also centred on a possible bid from Ottakar's, although it is unlikely to have enough spare cash. A possible three-way tie-up between the two booksellers and a third party has also been floated, but media and retail analysts remained unconvinced.</p><p>
"There are really only two possible buyers, Borders and Barnes &amp; Noble," said Richard Rutner, retail analyst at Seymour Pierce. "Ottakar's can't buy it and W H Smith has only just sold it." Another analyst said a sale would look like "an act of desperation". "It would probably mean HMV Media has to pay down some debt. The structure of the music industry is changing, music retailing is not a business you would want to be in."</p><p>
The chain is highly leveraged with heavy debts, operating in a competitive environment. "Waterstone's has a lot of fixed costs. A very small change in sales has a disproportionate effect on profits. This is not an area you would want to plunge into," the analyst said. Neil Bright, HMV Media Group financial director, refused to comment on the rumours.</p><p>
Scepticism remained strong about Mr Waterstone's ability to produce profits. One analyst said that Alan Giles, HMV Media chief executive, was a "good guy" who was "worth backing".</p><p>
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