Borders said Thursday it will sell its businesses in Australia, New Zealand and Singapore to fellow book retailer A&R Whitcoulls and private equity firm Pacific Equity Partners for as much as $104 million.
The nation's second-largest bookseller announced in March 2007 that it was exploring a possible sale of the businesses, which include 30 Borders superstores. Since then, Borders has been considering whether to sell off the entire company.
Borders Group Inc. said it will get about $90 million for the businesses, plus deferred payments of up to about $14 million next year if performance targets are met.
"This transaction represents an attractive valuation, permits us to forgo further investment in these businesses and provides our company with a significant cash infusion to further reduce debt, which is one of our key financial initiatives," Borders Chief Executive George Jones said in a statement.
Borders said the deal is expected to close next week.
The deal also means hedge fund Pershing Square Capital Management LP, Borders' largest shareholder, will not be forced to buy the operations in Australia, New Zealand and Singapore. Pershing Square had agreed, if needed, to pay $135 million for those and other international operations.
Borders earlier this year lined up $42.5 million in financing from Pershing Square to help the bookseller stay in business. Under that agreement, Borders had an option until Jan. 15 to require Pershing Square to buy its international subsidiaries if it was unable to sell them.
Under Thursday's deal, A&R Whitcoulls, which owns and operates more than 260 stores, including Angus & Robertson in Australia and Whitcoulls stores in New Zealand, will have the right to use the Borders brand in Australia, New Zealand and Singapore. Ian Draper, managing director of A&R Whitcoulls Group, said the Borders stores will complement the company's existing stores.
The announcement comes two days after Borders, which is more than a year into a restructuring, said it was eliminating 20 percent of its corporate jobs as part of an effort to cut annual expenses by $120 million.
Borders has lost market share both to online retailers and to discounters amid a difficult U.S. economic climate. The Ann Arbor-based company announced in March it would explore strategic alternatives, which could include a sale, and rival Barnes & Noble Inc. has assembled a management team to study the feasibility of a combination with Borders.
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On the Net:
A&R Whitcoulls Group: http://www.arw.co.nz
Borders Group Inc.: http://www.borders.com
Pacific Equity Partners: http://www.pep.com.au
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