THE founder of the Waterstone’s book chain could launch a bid of more than £100m to take the business private if owner HMV decides to sell, it is understood.
Tim Waterstone, the novelist-cum-entrepreneur who started the company in 1982, is reported to have lined up financing from backers including a London-based hedge fund. Waterstone has already tried to buy back the business once – for £280m in 2006 – but was unable to thrash out terms with its listed parent.
Waterstone’s performance has been a sore point with HMV shareholders in recent years. Operating profits tumbled 72 per cent to £2.8m last year as poor trading in the usually strong Christmas period contributed to a 6.2 per cent drop in like-for-like sales.
Dissatisfied investors are now thought to be pushing HMV to divest the subdivision. In a trading update this week, the entertainment retailer will reveal ongoing woes. Like-for-like sales at Waterstone’s fell four per cent in the past quarter, Nomura believes.
Waterstone opened the first shop in Old Brompton Road 28 years ago. He sold out to WH Smith in the early 1990s, before Smiths offloaded the company to HMV in 1998 for £300m. It now has more than 300 outlets across the UK.
In an interview this weekend, Waterstone described launching the book vendor as his smartest business idea. “A mixture of extreme arrogance, fabulous staff and enthusiasm made it a success,” he said, describing its growth pains as “tense but never terrifying”.