The hedge fund owner of the UK’s largest book chain, Waterstones, has bought Barnes & Noble, the biggest chain in the US, in a $683m (£537m) deal heralded as a boost in their battle to preserve real-world bookshops.

The UK arm of the $35bn Elliott Management hedge fund plans to install James Daunt, the Waterstones boss, in New York as chief executive of both chains, with the two brands retained and operated separately.

Elliott, which has a reputation for aggressive investment strategies, said the firms would benefit from sharing best practice under Daunt. The deal includes Barnes & Noble’s debt and values it at $6.50 a share, a 43% premium to the average figure in the 10 days before rumours of a merger first appeared.

Barnes & Noble is far larger than Waterstones, with more than twice as many stores and seven times the revenue.

The US bookseller has 627 stores, with a presence in all 50 US states, and recorded sales of $3.7bn (£2.9bn) in the 2018 financial year.

Waterstones has a total of 293 bookshops, including Foyles and Hatchards, and revenue of £402m last year. It also operates shops in Ireland, the Netherlands and Belgium.

Barnes & Noble’s founder and chairman, Leonard Riggio, said Waterstones and Elliott were “uniquely suited to improve and grow our company for many years ahead” and promised to work with Daunt for a smooth transition.

The deal represents a big leap for Daunt, 55, who quit a job in banking in his 20s to build a six-strong chain of upmarket Daunt bookshops in London. In 2011, when the music group HMV sold Waterstones to the Russian billionaire Alexander Mamut, he was hired to run the chain, even though he had always voiced scepticism about large book chains.

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James Daunt.



James Daunt. Photograph: Martin Godwin/The Guardian

However, Daunt turned around the loss-making chain and stayed on last year when Mamut sold the business to Elliott.

In March Daunt had to defend pay policies at Waterstones when 1,300 writers, including David Nicholls, Sally Rooney, Michael Rosen and Val McDermid, backed a campaign for the chain’s shop staff to be paid the living wage.

Their support followed a staff petition, signed by more than 6,000 people, which called on Daunt to pay booksellers a starting living wage of £9 an hour, or £10.55 for the Greater London area. Daunt said he would like to increase wages, but the chain could not afford to do so.

In a statement confirming the Barnes & Noble deal, Daunt said traditional bookshops faced “fearsome challenges from online and digital, a complex array of difficulties that for ease and some evident reason we lay at the door of Amazon”.

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He said his job was “to create, by investment and old-fashioned bookselling skill, bookshops good enough to be a pleasure in their own right and to have no equal as a place in which to choose a book. We counter thereby Amazon’s siren call and defend the continued existence of real bookshops.”

Elliott’s head of European private equity, Paul Best, said the investment in Barnes & Noble demonstrated “our conviction that readers continue to value the experience of a great bookstore”.

The deal, subject to regulatory and shareholder approval, is expected to be completed in the third quarter of this year.



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