Thursday, June 05, 2008

Borders Sell Australian Store Group

The only surprising thing about this announcement was that it was so long in coming. Borders have agreed to sell their store operations in Australia and New Zealand to Pacific Equity Partners the private equity firm and owners of Angus and Robertsons and Whitcoulls (NZ). The price paid is a disappointing $90mm in cash and deferred payments of $14mm. Earlier in the process amounts as high as $120mm were suggested and importantly this purchase price includes the rights to use the Borders brand name throughout the region.

Further details of the transaction may become clearer but to sell the branding without any long term licensing deal supporting a supplemental revenue source for Borders seems unfortunate.

There is also no comment from Borders on whether they will use the cash generated from this sale to repay the emergency financing provided by Pershing earlier this year.

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