Waterstone's owner seeks takeover conclusion

Book chain Ottakar’s today said it was looking to conclude takeover talks with entertainment retailer HMV “as quickly as possible” as the company reported a further sharp drop in sales.

The firm, which rejected a revised offer from the Waterstone’s owner last week, said it remained in talks with HMV but gave no further details over the planned takeover.

The announcement came as Ottakar’s revealed it was continuing to suffer from a tough retail environment which has seen online retailers and supermarkets offer stiff competition to traditional book sellers.

Ottakar’s said like-for-like sales in the 16 weeks to May 20 were 8% lower than the same period last year while total sales fell 4%.

It said the position was largely unchanged from the 8.1% sales decline for the eight weeks to March, although chairman Philip Dunne told the company’s annual meeting that recent figures suggested the slow start to the year may be improving.

HMV’s revised offer, described as “materially below” Ottakar’s then-market price of 328p, was made after the Competition Commission approved the planned tie-up despite concerns from the publishing world that consumers would suffer.

The retailer had earlier been prepared to offer £96.4m (€141m) but the bid lapsed when the Office of Fair Trading referred the proposal for a full competition inquiry.

HMV has also recently seen off an attempt from Tim Waterstone to buy back the book chain he founded.

Ottakar’s has seen a third of its market value wiped out since October last year as its shares plunged from a high of 440p to stand at 293p today, valuing the company at £64.7m (€94.8m).

Richard Ratner, retail analyst at Seymour Pierce, said he belied HMV would need to make an offer of 325p a share to ensure a successful bid.

However, he added that an improved offer may bring fellow high street retailer WH Smith into the bidding process but if no offer was forthcoming, Ottakar’s shares could slide further.

London-based Ottakar’s, which employs around 2,000 staff across 140 stores, said the outcome for the full year would be determined by the key Christmas trading period but said it was on course to meet market expectations.

It added that new store openings would take place in Doncaster, Knutsford, Romsey and Plymouth in time for Christmas.