Whitcoulls has cancelled plans to buy the Borders book stores in Australasia. Photo / Greg Bowker
The collapse of A&R Whitcoulls' bid to buy the Borders bookstore chain's Australasian stores leaves the door open for local contender Paper Plus.
The New Zealand franchise was largely considered the dark horse among the contenders for the US-based Borders Group's Australasian operations when they were first put
on the block nearly a year ago.
It made an offer last year, but talks have been on the backburner as Borders actively wooed front runner Whitcoulls.
Yesterday, Paper Plus chief executive Rob Smith did not rule out a resumption of talks.
"The Paper Plus Group earlier completed the due diligence process in the event of a purchase, and we are currently assessing the options for our company." Due to the company's co-operative structure, it was not required to seek regulatory clearance.
Although like Borders it makes a significant part of its revenue from books, it is in a different market segment.
Australian book chain Dymocks has also expressed an interest.
The future of the five New Zealand stores and 23 Australian stores became murky yesterday after A&R Whitcoulls announced that negotiations with the Borders Group had stopped and a transaction was "unlikely".
The move came as a surprise as A&R Whitcoulls - owned by private equity group Pacific Equity Partners - was seen as a favourite to buy the business after it was named the preferred bidder last September.
It had cleared regulatory hurdles on both sides of the Tasman.
The companies had been working for nearly a year towards a cash-and-shares arrangement that would have seen Borders take a substantial stake in A&R Whitcoulls.
But that proved to be the sticking point when the parties could not agree on terms acceptable to Whitcoulls' shareholders.
In a statement, A&R Whitcoulls said it was disappointed that they were unable to reach agreement.
"However, following a sale process that has spanned almost a year, the A&R Whitcoulls board is comfortable that negotiations have reached a natural conclusion."
The Australasian stores are valued at around $100 million.
A&R Whitcoulls, which owns 60 stores in New Zealand, maintained that its financiers were behind the purchase, despite volatile market conditions.
