The sale of Waterstones to hedge fund Elliott Advisors is likely to close at the end of this month, The Bookseller understands. The looming deal has caused a delay in increasing the pay of senior booksellers, after junior staff saw their salaries rise with the increase in the National Minimum Wage.
A source with knowledge of the situation, who wished not to be named, said they believed the deal was on track to coincide with Waterstones’ financial year end on 30th April.
Elliott Advisors is the UK arm of the American hedge fund founded by c.e.o. Paul Singer. Sky News reported in January that the firm was one of a small number of bidders to have lodged formal offers to buy the bookselling chain and had been granted a period of exclusivity, albeit for a sum “far lower” than the £250m speculated by previous reports.
Elliott Management has not responded for a request for comment from The Bookseller, while Waterstones’ managing director James Daunt has declined to comment.
Waterstones’ current owner Russian oligarch Alexander Mamut put the business up for sale in October, handled by N M Rothschild.
The Bookseller understands the proximity of the sale has caused a delay to increasing the pay of senior booksellers at the chain. The situation has led to some disquiet among senior staff, who were not given a pay rise at the same time as their junior colleagues when the National Minimum Wage rose to £7.83 an hour for those over 25-years-old on 1st April 2018. The situation has meant there is currently little difference between what booksellers and senior booksellers are being paid.
One, who wished not to be named, said: "We’re in a position where senior booksellers with years of experience are now being paid the same as booksellers who started just before Christmas as temps. It feels like our skills, knowledge and expertise count for nothing."
However, Daunt told The Bookseller he was confident senior staff would get a pay rise this month and the increase would not need to wait for the new owners.
"I have been unequivocal in stating that a pay rise for Senior, Lead and Expert booksellers will be given," he said. "It does require approval but I am confident this will be in plenty of time for the April payroll. It will not have to wait for the new owners."
Mamut has owned the chain since 2011, when he bought it for £53m from the HMV Group. Paul Singer’s son Gordon Singer runs the London-based Elliott Advisors, which currently owns a stake in retailer Game Digital.
The firm is known for “taking aggressive activist positions in a string of major public companies”, according to Sky News and has helped to drive up the acquisition price of deals including Steinhoff’s bid for Poundland, reported the Financial Times, which also said the company had been criticised for being “overly aggressive, a ruthless opportunist, even a bully.” However, the newspaper also reported the firm had “established a reputation as one of the most successful activist funds across Europe". In 2016 the UK arm’s profits jumped from £3.7m to £4.7m, reported the Daily Mail and it has recently hired Paul Best, previously managing director at Warburg Pincus, to focus on private equity deals. When Elliott Advisors briefly opened its main fund to new investments last year, it raised $5bn in 24 hours, according to the Financial Times.
Waterstones' financial performance for the year to April 2017 showed that pre-tax profit was up 80% to £18m, although sales were marginally down by 1.3% to £403.8m.
Daunt has previously indicated he wanted to stay on at the helm of the chain following the sale.