Borders Sells UK, Ireland Units for $20M

ANN ARBOR, MI-Borders Group Inc. has struck a deal with London-based private equity investor Risk Capital Partners for Risk Capital to buy the Borders UK and Ireland subsidiaries through a subsidiary called Bookshop Acquisitions Ltd. that Risk Capital has formed for the purpose of acquiring the Borders units. The purchase price consists of a £10 million (approximately $20 million) up-front cash payment plus an additional payment of up to £10 million of deferred cash consideration that will be contingent on the future performance of the business. In addition, Borders Group will receive an equity interest of approximately 17% in Bookshop Acquisitions Ltd.

The transaction includes all 41 Borders superstores in the UK and the Borders superstore in Ireland, as well as all 28 Books etc. stores in the UK Risk Capital Partners also retains the right to use the Borders and Books etc. brand names consistent with a brand licensing agreement as part of the acquisition. The Borders U.K. and Ireland management team will continue to be led by David Roche, who will serve as chief executive officer of the new company.

The sale represents one of the steps that Borders is taking in its strategic plan to drive a turnaround of the Borders Group, according to CEO George Jones. The Borders CEO comments that the sale will allow the US firm to “focus investment and resources on our core business, which is the US superstore segment.” At the same time, Jones points out, the structure of the deal provides for Borders to share in the future potential upside of the UK business under the ownership of Risk Capital Partners.