Tuesday, May 01, 2007

Borders International Update

Borders announced in March that they were reorganizing their store operations and would be divesting most of their international operations including the UK stores which they (mostly) acquired via the purchase of Books etc. In other parts of the world particularly in SE Asia and Australia/New Zealand, Borders built their brand in these markets from scratch. Initially the growth was slow: They only had a store in Singapore for a few years; however, by 2002 store development in Australia was in full swing. Things seemed to be going so well that Borders opened several new stores in New Zealand in the week before they announced that they we getting out of the international business.

In my old home town newspaper this morning, The Age confirms that private equity firm Pacific Equity Partners is actively interested in purchasing the Borders stores and naming rights in the Australia/New Zealand market. The book retail market in Australia is dominated by two retailers. Angus & Robertson, which is now owned by PEP, was owned by WH Smith and numbers about 180 outlets. A&R stores are predominately corporate owned. Dymocks is the other chain retailer and most of their stores are franchised. Leading Edge is a ‘consortium’ of independent retailers that have joined together to aid in business negotiations and enable technology development.

(On a related note, Readings a Melbourne independent retailer and customer of Global Books In Print for many years, won chain bookseller of the year in 2006 even though they only have about five stores. Mark Rubbo the owner has consistently won independent bookseller of the year for many years and successfully battled against a Borders superstore that opened across the street from his main store).

PEP is interested in expanding Borders across the market and will do so without merging the brand with A&R. A&R also own Whitcoulls in New Zealand and PEP appear to recognize that there is room in that market for both brands as well. The Age article also notes that Borders management are also trying to interest private equity in fronting a bid. It would seem likely that some accommodation will be made since the management will be vital to the continued performance and development of Borders in Australia.

What Borders Could Have Said
Borders Reports Their Strategic Plan

(Thanks to my Aussie stringer for the article).

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