Hedge Fund Buying Majority Interest in Waterstones

Hedge fund Elliott Advisors has bought a majority interest in Waterstones and James Daunt will remain CEO of the U.K. bookselling chain, the Bookseller reported. Current owner Alexander Mamut's Lynwood Investments will own a minority stake. Neither party disclosed how large its stake will be. The deal is expected to close in May.

"This is a very happy outcome for Waterstones," Daunt said. "Our booksellers can be immensely proud to have proved through good, old-fashioned bookselling, the enduring appeal and worth of real bookshops. I thank Lynwood Investments for their invaluable support through this turnaround, and we enter new ownership looking forward with great optimism to the next chapter in the development of Waterstones."

Paul Best, who joined Elliott Advisors last June as head of European private equity, said: "As the leading physical book retailer in the U.K., Waterstones is a mainstay of U.K. high streets and 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."

The Bookseller reported that U.K. publishers, some of whom had been approached by Elliott Advisors recently to learn more about the business, were happy with the deal, particularly because Daunt, who engineered a turnaround of the once-troubled chain, will remain in charge. He was brought in by Russian billionaire Mamut, after he purchased Waterstones in 2011.

Elliott Advisors is the U.K. arm of Elliott Management Corp., the investment management firm headed by Paul Singer, known for an interest in companies with heavy debt, for his financial support of the Republican Party and for his support of LGBTQ rights. Elliott Advisors is run by Singer's son Gordon Singer.

Last year, Mamut asked N.M. Rothschild & Sons to advise him on strategic options for Waterstones, including a sale for £250 million (about $349 million), although speculation is that the price would be lower. Mamut apparently needed to raise cash because of the collapse last year of Russia's largest private bank, Otkritie, in which he was a major shareholder.

Under James Daunt--who owns Daunt Books, which has nine shops in and near London--Waterstones became profitable in 2015. Waterstones has some 275 stores in the U.K., Ireland and continental Europe.

Powered by: Xtenit