Battle for Ottakar's intensifies |
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Sat, 27 Aug 2005 00:35
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LONDON - It looks like book chain Ottakar's is in for some testing times as rivals HMV have announced that they would be bidding for the ownership stakes in the chain. A week ago Ottakar's founders announced that they would be making the book chain private. However, Waterstone chain owner HMV has now entered the fray.
Announcing its intentions, HMV said in a statement, "HMV confirms that it is in preliminary discussions with the committee which may or may not lead to an offer being made for the company."
A spokesman for Ottakar's commented, "The independent directors have noted the announcement and are considering it. They will respond in due course." The previous announcement by Ottakar's about a prospective management buyout had already increased the share prices. Chief executive James Heneage and chairman Philip Dunne own around 14 percent of the 137-strong chain between them. The prospect of a bidding war sent the shares surging by nearly 6 percent. In early afternoon trading, Ottakar's shares jumped by 20 pence to 363 pence. At this rate, the chain is valued at £79.5 million before any take over premium is added to it.
Analysts say that HMV's entry into the fray makes business sense, Rory Codd, an analyst at Numis Securities was of the opinion that last week's announcement of a management buyout was expected to trigger interest from other trade bodies and hence HMV's bid is not a surprise, "Ottakar's is a very good fit with the business, HMV is phenomenally cash generative and could drag out significant synergies," he said. John Stevenson, an analyst at Shore Capital, seconded these views, "This makes good sense for HMV as there is very little cross-over in the store base," he said. "It is almost certain the competition authorities will run the slide rule over the deal, which is not to say they won't get it through."
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