Connect Books has been sold to private equity firm Aurelius for just £6m – nearly half of the originally-agreed sale price.
The Munich-based investor first agreed to buy the book wholesaler and distributor in December for "up to" £11.6m, but pulled out of the deal in January saying it could see “no way of financing” it. The move was unforeseen by the Connect Group, which threatened legal action.
However, in a surprise move this morning (15th February), the two companies revealed they have agreed “revised” sale terms and have completed the sale of Connect Books to Aurelius for £5.6m less than the original price, for just £6m. Sales for Connect Books stood at £189.7m for the 45-week period to 15th July 2017.
Justin Adams, managing director of Connect Books, told the Bookseller: “The talks between the Connect Group and Aurelius never really ended. The process has been a bit drawn out, but Aurelius has always been interested in the business, it's just that they had to look at the price they wanted to pay against what they have to invest in the business. We have been working at a pace to get the deal completed, and eventually it was done late last night."
He added: “I am expecting staff to be pleased. There has been a period of uncertainty while this has been going on which has been a bit unsettling for people, but we have now got beyond that and completed the deal. Staff, customers and publishers now have certainty of ownership and we can get on with out plans.”
The new owners have rebranded the company back to the Bertram Group and plan to concentrate on “driving efficiencies” and “accelerating growth” across its divisions.
Aurelius also intends to grow the company’s international sales.
In a statement, the company said: “Aurelius sees significant potential for Connect Books and in the coming months its operational task force experts will support the business’ leadership team in executing a carve-out from Connect Group, ensuring minimal distraction from the company’s day-to-day business.
“Aurelius will also work with the team to implement its planned strategy to drive efficiencies and accelerate growth across its full brand range, strengthening its operations, and focusing on expanding the business’ international footprint, service offering, marketing capabilities and e-commerce platform.”
Dirk Markus, chief executive of Aurelius, expressed pleasure in completing the acquisition “despite some challenges”.
“Connect Books is an exciting business and one for which Aurelius’ specialism is very well suited,” he said. “We look forward to working with the company to provide the financial and operational support that will allow the business to reach its full potential.”
Adams added he was “pleased” the two firms had been able to agree and complete a revised deal. “I am confident that we will benefit from the financial and operational capabilities that Aurelius bring and that they will help us on our journey to build the best one stop shop for content, and support us in the ongoing shift towards becoming a more customer-centric, agile solutions provider for our customers and suppliers.”
Proceeds from the sale will go towards reducing Connect Group's debt. Mark Cashmore, chief executive officer of the Connect Group said the disposal would allow the group to concentrate on its transformation strategy “while ensuring the books business is able to prosper under new and focused ownership”.
Connect Books consists of Bertram Books, Wordery.com, Dawson Books, Bertrams Library Services, Erasmus, and Houtschild. In September 2015, Connect Books bought the remaining 49% stake in Wordery from the founding partners for an initial consideration of £5.1m - nearly the sale price of the whole Connect Books business announced today- and a possible further £3.3m.
In 2009, Bertrams was sold to the Connect Group - then called Smiths News PLC, for £8.6m.
The Aurelius Group is a pan-European asset manager with offices in Munich, London, Stockholm and Madrid. Over the last 10 years it says it has grown from a local turnaround investor to an international multi-asset manager investing in a wide range of sectors and across the capital structure.