Vulture hedge fund Elliott Advisors has bought Waterstones
Britain’s largest book chain, Waterstones, has been snapped up by vulture hedge fund Elliott Advisors.
The investors, who have been ploughing billions into companies across the world, are thought to have paid as much as £250million for the chain from its current owner, Russian billionaire Alexander Mamut.
Usually when Elliott invests it lays out an agenda to transform the business. It is not known what it wants to do with Waterstones, but it has pledged to keep on chief executive James Daunt, who helped revive the business.
Elliott, which is owned by the feared Wall Street billionaire Paul Singer, could yet consider a further private sale or public listing for Waterstones.
The ruthless investor, which has around £25billion of funds under management, will finance the deal and provide funding to grow the 283-store chain.
Mamut’s Lynwood Investments will retain a minority stake.
Daunt said the acquisition was ‘a very happy outcome’, adding: ‘Our booksellers can be immensely proud to have proved through good, old-fashioned bookselling, the enduring appeal and worth of real bookshops.’
Paul Best, head of European private equity at Elliott, added: ‘Waterstones has a huge and loyal customer base. We look forward to supporting James Daunt and his entire team over the long-term as they continue to build and grow the business.’
Waterstones is the UK’s only large specialist book retailer and employs more than 3,000 people. The average shop has around 30,000 titles, with over 200,000 stocked in its biggest store.
The deal comes after oligarch Mamut was forced to put it up for sale in October.
He has been struggling with cash problems back home, in part due to the collapse of Moscow-based private bank Otkritie, in which he holds a major stake.
He bought Waterstones from HMV for £53million in 2011 and appointed Daunt to lead it back to growth.
Since Daunt, 54, took the reins, Waterstones has been transformed from a loss-making business to one which grew profits by 80 per cent last year to £18million.
It struggled to grow sales amid a boom in ebooks sparked by the launch of Amazon’s Kindle. However, trends have shifted back in favour of books.
Elliott’s purchase is the latest in a string of moves to tighten its grip on British companies.
Just this week leisure group Whitbread caved in to investor pressure and agreed to spin off its Costa Coffee business, days after Elliott took a stake. It is also thought to have made around £26million from asset-stripper Melrose’s recent takeover of British engineer GKN.
While perhaps better known for taking smaller stakes in companies, Elliott has made significant investments in a number of firms in recent years.
Elliott accumulated a 99 per cent stake in Game Digital in 2014 shortly before the business listed on the London Stock Exchange.
It gradually reduced its investment in recent years before offloading its entire £24million stake earlier this month.