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HMV may be considering Mamut’s Waterstones bid

By CMU Editorial | Published on Tuesday 1 March 2011

Despite previously rejecting proposals they sell off some key assets to help combat declining revenues and deal with loan covenant issues, HMV bosses are reportedly now considering selling their Waterstones business to Russian billionaire Alexander Mamut.

As previously reported, Mamut has been quietly increasing his stake in the wider HMV Group for a while and now owns 6.1%, however it became clear last month that his real interest was in the retailer’s books chain. It is thought that he has now teamed up with the book selling brand’s founder Tim Waterstone, who made an offer to buy his company back from HMV once before, and together they are now engaged in talks with HMV bosses about making a Waterstones bid.

Waterstones has been performing better than the main HMV stores in the last year or so, although that’s not to say the bookseller hasn’t been facing its own challenges, mainly competition from supermarkets and mail-order websites. And that’s before you consider the threat of the emerging e-book market, which is only really gaining any momentum now.

Therefore, offloading Waterstones might be a good move for HMV, despite the firm’s recent strategy of diversification, especially if it brings in some quick cash.

Although having a second high street brand does extend the markets in which the HMV Group trades, to a point, the HMV stores already sell books, plus for CEO Simon Fox’s diversification strategy to really work the company needs to diversify off the high street, a process it has already begun. If a Waterstones sale gave the firm a little more security to allow that process to continue, that could make a lot of sense for HMV.

Certainly the firm’s share price was on the up yesterday as talk of a Waterstones bid by Mamut gained momentum.