Borders Explores Sale
New York City Borders Group on Thursday suspended its quarterly dividend and said it was reviewing strategic options, including the sale of some or all of its businesses.
The company, which also posted a quarterly profit, said its largest shareholder, Pershing Square Capital Management, had offered to purchase some of its businesses in Australia, New Zealand, Singapore and the United Kingdom for $125 million.
Borders has the right, but not the obligation, to require the hedge fund to buy those assets under the backstop purchase offer.
Pershing Square also has agreed to lend Borders $42.5 million and will receive options to buy a 19.99% stake in the company at $7 a share. The stock closed on Wednesday at $7.10.
“This will be a challenging year for retailers due to continued uncertainty in the economic environment,” Borders chief executive George Jones said in a statement. “Looking forward to 2008 and beyond, the company determined that additional capital was required to execute our operating plan.”
Without the funding, the company may have faced liquidity issues in the next few months, Jones said. It said it was suspending the dividend to preserve capital for operations and strategic initiatives.
Borders said it had appointed JPMorgan Securities and Merrill Lynch & Co. as financial advisors.
The company reported net profit of $64.7 million for the fourth quarter ended Feb. 2, compared with a year-earlier loss of $73.6 million that included large charges for closing Waldenbooks stores.
Revenue fell to $1.35 billion from $1.37 billion, but Borders said sales were up 2.8% after excluding the impact of an extra week in the year-earlier period.
Jones said that although the company was on track to reach its financial targets, worsening economic conditions would slow its progress.
Borders began a turnaround plan last year. It is closing underperforming Waldenbooks stores, weighing options for its international units, and refocusing on its core U.S. store operations.
Amazon.com completes Audible buy
SEATTLE Amazon.com today announced that Audible has become a wholly-owned subsidiary of the company. All remaining outstanding shares of Audible, other than those held by stockholders who properly perfect appraisal rights under Delaware law, were converted into the right to receive $11.50 per share in cash.
Audible is the leading provider of spoken audio information and entertainment on the Internet. Through its websites in the US and UK and alliances in Germany and France, Audible offers over 80,000 programs, including audiobooks and other spoken word content from more than 520 content partners that include leading audiobook publishers, broadcasters, entertainers, magazine and newspaper publishers, and business information providers. Content from Audible is downloaded and played back on personal computers, CDs, or AudibleReady computer-based and wireless mobile devices.
Retailers come to aid of HD-DVD owners
MINNEAPOLIS The sudden end to the high-definition DVD format war has retailers scrambling to find ways to compensate customers who bought into the losing HD-DVD format.
Best Buy reported today that it is giving $50 gift cards to customers who bought an HD-DVD player or HD-DVD attachment from its U.S. stores before Feb. 23. In addition, starting on March 21, the company is offering customers who don’t want to get rid of their HD-DVD players the chance to trade them in for a value determined by the Best Buy’s Online Trade-In Center.
“The DVD format war has divided our customers in a way we haven’t seen since Betamax took on VHS more than 20 years ago,” said Brian Dunn, president and coo for Best Buy. “At Best Buy, we understood and shared our customers’ frustrations as they were being asked to choose one format or the other. Now that the format war is over, we hope these gift cards will reassure our customers that we will help them make a smooth transition into the right technology for their needs.”
Circuit City is giving customers who jumped on the HD-DVD bandwagon this year a longer period of time to return their players. The chain last week extended its 30-day return policy on purchases to 90 days for HD-DVD players. The policy applies only to players though and not to HD-DVD discs.