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HMV sells Waterstones

By | Published on Friday 20 May 2011


HMV has sold Waterstones to an investment fund controlled by everyone’s favourite Russian dude Alexander Mamut (what do you mean you prefer Len Blavatnik?). A&NN Capital Fund Management will pay £53 million for the book chain, £40 million on deal completion and £13 million in the autumn, which is a whole ten million more than previously rumoured. Good job, Simon.

The HMV Group put Waterstones up for sale in March, of course, as it attempted to reduce its debts after slumping sales at the HMV stores meant the retail and entertainment company couldn’t meet the covenants on its £130 million plus bank loans. We’ve known for some time that Mamut, a minority shareholder in the wider HMV Group, has been interested in the firm’s books chain, and he was always a favourite to buy Waterstones once it was up for sale, though there were other bidders too.

In a statement the company said the sale, which should be finalised next month, represented an “important step towards strengthening the capital structure of the remaining HMV Group”, adding that the firm’s management had concluded that a disposal of Waterstones was “the most timely and effective way” to enable a refinancing of the group’s debts.

HMV CEO Simon Fox added: “We expect this deal to enable the Group to achieve a reduction in the group’s borrowing requirements, and, in turn, focus on plans for transforming the HMV Group into a broad-based entertainment business”.

Confirming the deal from his side, Mamut told reporters: “We are extremely pleased to have reached an agreement to acquire Waterstones and its great heritage. I believe that our investment and strategy will secure a dynamic future for the UK’s largest bookshop chain and I look forward to working with its booksellers in building on the principle of excellent bookselling, which is at the very heart of the business”.

Most of HMV’s debts were run up diversifying the company’s operations into digital, live music and artist management by acquiring the MAMA Group and a stake in 7Digital. Fox had hoped to achieve that diversification while holding on to all of the existing HMV retail business, but with hardships across the board on the high street it was perhaps inevitable the retail side of the company would have to be cut back to fund the new ventures.