April 25, 2006 | posted by Michael Baxter in Uncategorized |

It seems to us that there are two titans in the UK book retail trade. And both are in danger of being consigned to Hades, or wherever it is titans go when they are finished with.

First there is Tim Waterstone, who founded the Watertown’s book chain, which today has 200 stores, 25 years ago. In his previous incarnation. Mr Waterstone had worked for WH Smiths, he was fired, and while the sleeping giant snored, the dynamic entrepreneur applied modern day marketing techniques to the sale of highbrow academic and literary books to launch his eponymous bookstore. Many of his early stores were based near universities, and in 1993 he sold to WH Smith, who in turn sold to HMV.

Then there is Ottakar’s which was founded in 1987 by James Heneage and today has 137 stores.

But in recent times, the magic touch seems to have gone out of both retailers. Competition from supermarkets and online book sellers has hit the bottom line of both companies.

Then last year, Heneage attempted to put together a ‘management buy out’ that would have seen him run the store the way he thought it should be run. Some hailed this as an opportunity for Ottakar’s to get back on track, but instead he was outbid. HMV offered more, and recently the regulator has approved the merger.

Time has elapsed now, and the bidding process needs to start a fresh, but until yesterday it seemed inevitable that the struggling Waterstones and Ottakar’s will soon become one. Their uniqueness, and perhaps their dynamism will be lost, the Authors Guild, who objected to the merger in such strong terms, will be disappointed, but at least, or so it seemed, the newly enlarged company will have bigger buying muscle
But yesterday, a spanner was thrown into the works, as Tim Waterstone offered £280mn to buy the company he founded. And as for the Ottakar’s merger he said, “We’re completely opposed to it. Waterstone’s is in trouble and its market share is declining. The relationship it has with publishers has deteriorated and is now so awful that far from being able to get better terms from them, they will probably go up.”
“Ottakar’s is also in trouble and what’s the point of putting two troubled companies together?”
Mr Waterstone is teaming up with Anthony Forbes Watson, the former Penguin Group chief executive. They made their initial offer in February, but have not yet had a response, and fearing that HMV was trying to buy time to prepare its new big for Ottakar’s have decided to go public.
Mr Watersone said, ” It really depresses me that it has seriously lost its way. It is not being well run and its results are truly awful. It needs to get back to being the best bookseller in the world.”
As for Ottakar’s it appears the circle of business is just rotating. WH Smith who bought and later sold Waterstones, is now the favourite to pick up that particular booty.”