HMV 'targeted in takeover bid'
Music and books retailer HMV was today reported to be an £800m (€1.2bn) takeover target of private equity firm Permira.
Financial advisers have been appointed by Permira which had intended to approach HMV as early as this week, according to The Sunday Times.
HMV, which owns the Waterstone’s book chain, is considered by analysts to be vulnerable to a takeover because its share price is languishing at a two-year low.
Like-for-like sales fell 5.5% over Christmas at HMV and were down 2.4% at Waterstone’s as the company felt the competitive heat from supermarkets and internet retailers.
The decline was made worse by heavy discounting in an attempt to lure shoppers back into its stores, which in turn slashed profit margins.
News of the poor festive performance came with the revelation that chief executive Alan Giles will retire in December after eight years in charge.
HMV was also frustrated in its bid to take over UK high street bookseller Ottakar’s when its £96.4m (€141m) bid was referred to the Competition Commission for a full-scale inquiry.
According to the report, it is unclear whether Permira would proceed with the acquisition of Ottakar’s if it was successful in bidding for HMV.
Permira is no stranger to retail investments having backed the takeover of New Look by Tom Singh, who founded the UK’s third-largest womenswear chain in 1969.
It was also poised to table a £940m (€1.4bn) bid for WH Smith in the summer of 2004 until being put off by the need for a large amount of cash to bridge a gap in the company’s pension fund.
The report said banking heavyweight Merrill Lynch had been asked to advise Permira on a takeover of HMV, but revelation of the bid interest could scupper its plans.
In addition, the Takeover Panel may also force Permira to make an announcement about its intentions this week.
HMV was formed in 1998 by the acquisition of the high street chain and Dillon’s from music giant EMI along with Waterstone’s from WH Smith.
The brand itself dates back to 1921 when the first HMV store opened on London’s Oxford Street.
