U.K. Entertainment Retailer HMV Lives to Fight Another Day
LONDON -- Restructuring specialist and private equity firm Hilco has finalized the deal to rescue struggling British music, DVD and video game retailer HMV.
Hilco, which a couple of years ago acquired HMV Canada, said Friday it has acquired 132 HMV shops and all nine branches of the Fopp chain in a deal that could save 2,500 jobs.
The restructuring specialist in January effectively took control of HMV by buying its estimated $275 million in debt from creditors Lloyds and Royal Bank of Scotland after the retailer collapsed after months of red ink.
Music labels, led by Universal Music Group, and film studios are believed to support a buyout of the retailer by Hilco.
Hilco did not disclose the price paid, but reports put it at $76 million (£50 million).
Hilco chief executive Paul McGowan said Hilco hopes to replicate its success with HMV Canada, which it acquired nearly two years ago and which he said was now "trading strongly."
"The structural differences in the markets and the higher level of competition in the U.K. will prove additional challenges for the U.K. business, but we believe it has a successful future ahead of it," said McGowan.
Another Hilco executive, Ian Topping, said one of the first moves for HMV in the U.K. would be to "reverse the earlier decisions to sell tablets and other devices in the stores and to reclaim the space for an enhanced music and visual range."
Hilco plans to have its own people working alongside existing HMV management in the new setup.
It said the Hilco team would be led by Topping, formerly the chief executive of the furniture retail group Steinhoff in the U.K., and Henry Foster, an investment director at Hilco, with McGowan taking up the position of chairman of the new business.