Ottakar's agrees to HMV takeover

UK book shop chain Ottakar’s agreed to a takeover by HMV today after conceding it faced a losing battle against supermarkets and online retailers.

The deal for Ottakar’s is worth almost £63m (€92m), but is significantly lower than the £96.4m (€141m) offered by Waterstone’s owner HMV last year.

That deal was scuppered by a competition investigation, while Ottakar’s has also seen a further decline in trading since then.

Ottakar's chairman Philip Dunne said the book market had undergone significant change in the past year, with new levels of competition from supermarkets and web retailers having an impact on all specialist booksellers.

He added: “Against this background, and given the costs and risks associated with implementing the necessary restructuring programme to compete longer term, the board of Ottakar’s believes that the offer is fair and reasonable.”

Mr Dunne said the recommendation was in the absence of a higher offer being tabled by another party.

No other groups have so far expressed an interest in buying Ottakar’s, although WH Smith is seen in the London market as a potential bidder.

The original offer from HMV caused a storm in the literary community and led to the deal being referred to the Competition Commission for an investigation.

That found in HMV’s favour because of the presence of supermarkets and online operators such as Amazon.

HMV chief executive Alan Giles said Ottakar’s store portfolio was highly complementary to that of Waterstone’s and would benefit from his company’s stock management systems and a wider range of books.

He added: “The strategic rationale for the acquisition of Ottakar’s is now greater than ever. A combined Waterstone’s and Ottakar’s business will create an exciting, quality bookseller, able to respond better to the increasingly competitive pressures of the retail market.”

HMV has not yet said whether it plans to use the Waterstone’s brand for the 141 stores in the Ottakar's portfolio.