Quercus puts itself up for sale as losses mount

QUERCUS, the independent publisher behind Girl With The Dragon Tattoo, yesterday unexpectedly announced that it is up for sale.

In a surprise stock market announcement, the Baker Street-based firm said that it had appointed mergers and acquisitions specialists Livingstone Partners to advise on the sale process.

The firm said it believed it was “in the best interests” of its shareholders to seek a buyer.

The news comes after Quercus warned investors on Friday to expect a “significant trading loss” for 2013, as a tough Christmas for book retailers led to disappointing orders at the end of the year.

Quercus, listed on the ISDX small-cap exchange said yesterday that it remains in “constructive dialogue” with its bankers at Barclays about the terms of its loans.

Analysts at Northland Capital Partners said the firm’s shares were trading at a discount to the company’s real value, even when the sales slump is included.

“Having invested substantially in its operations over the past couple of years as well as expanding its catalogue, there is value to be had,” they said in a note.

The firm’s largest shareholder is Pentland Group, which holds around 47 per cent. Pentland, chaired by Stephen Rubin, is best known for its stake in Reebok and wellies-maker Hunter.

Co-founder Mark Smith has 13 per cent and fund manager Artemis holds 6.5 per cent.

In last week’s trading update, the firm said “continuing issues within the book trade which led retailers to adopt very conservative ordering policies”, were partly to blame for weak sales in the three months to the end of the year. It also said an expected upturn in digital sales was “lower than expected”.

ADVISERS THE QUEUE TO BUY QUERCUS

RICHARD FETTERMAN

LIVINGSTONE PARTNERS

Mid-market M&A specialists Livingstone Partners have completed over 110 transactions in the media and technology industry, one of the 38-year-old firm’s five core industry sectors along with the business services, consumer, healthcare and industrial industries.

The corporate finance house, which was ranked by Thomson Financial as the UK’s top mid-market boutique in 2006 and 2008, was called Livingstone Guarantee until its 2007 merger with Spanish partners NC Finanzas Corporativas and Chicago-based advisers ONE Worldwide.

Leading the search for a buyer for Quercus is Livingstone’s Richard Fetterman, a qualified solicitor who has previously led deals including the £33m sale of John Brown Publishing to private equity firm Bridgepoint Capital in 2004.

Senior consultant Richard Barlow is also working on the sale process. He has previously worked for Kleinwort Benson and KPMG Corporate Finance and has built up a track record in advising on corporate finance.

Quercus’ ISDX corporate adviser is Peterhouse Corporate Finance.

TOM BAYLEY