Borders agrees to sell U.K., Ireland stores
The nation's second-largest bookseller said the purchase price includes a cash payment of about $20 million plus a payment of up to about $20 million that is contingent on the future performance of the business.
"The sale of our U.K. and Ireland subsidiaries is a major step forward in our previously announced strategic plan to drive a turnaround of Borders," George Jones, Borders' chief executive, said in a statement. "This sale allows us to focus investment and resources on our core business, which is the U.S. superstore segment."
London-based Risk Capital Partners has set up a subsidiary called Bookshop Acquisitions Ltd. for the purchase. The Borders U.K. and Ireland management team will continue to be led by David Roche, who will serve as CEO of the new company.
Under the deal, Borders will receive an equity interest of about 17% in Bookshop Acquisitions.
"We intend to build on the strength of the business and this well-respected brand as one of the U.K.'s largest book retailers," said Luke Johnson, chairman of Risk Capital Partners. "Our strategy will focus on improving sales and optimizing the store base while improving margins and inventory management."
The sale includes all 41 Borders superstores in the U.K. and a Borders superstore in Ireland, as well as all 28 Books etc. stores in the U.K. The sale doesn't include the Paperchase business, which Borders is keeping.
Also not included in the sale is Borders Asia Pacific, which includes 20 Borders superstores in Australia and four superstores in New Zealand that are in the midst of a previously announced strategic alternatives review.
Borders said it will incur a non-cash, after-tax loss for the sale of about $115 million. The loss will be recorded in the third quarter.
In March, Ann Arbor-based Borders said it was exploring strategic alternatives for most of its international operations, including those in the U.K. and Ireland operations. Strategic alternatives often can include a sale of assets.