Eason set to abandon purchase of rival due to regulator's move
BOOKSELLER EASON looks set to abandon its purchase of rival Argosy after the Competition Authority shot down the deal yesterday.
Eason Son, owner of the wholesale and retail books and newsagents chain, agreed to buy its smaller independent rival, Argosy Libraries, on August 27th.
The parties voluntarily informed the Competition Authority of the deal. The authority launched an investigation into the deal shortly afterwards, on the grounds that it could damage competition in the wholesale books market.
Both Eason and the authority confirmed yesterday that the mergers watchdog is not going to approve the deal, on the grounds that it will limit competition.
Eason issued a statement saying it was “disappointed with the authority’s decision and does not believe the proposed transaction would have damaged competition in the wholesale book market in Ireland”.
The company intends to appeal the authority’s decision to the courts. Both Eason and Argosy have told the authority they will not go ahead with the deal, which was subject to the merger regulator’s approval.
The authority said it had identified several competition concerns and feared the deal would have resulted in increased prices and a reduction in the range of new books available for sale to consumers.
The agency’s concerns were based on the fact that the purchase would have cut the number of new book wholesalers operating in the State to one from two.
Argosy Libraries managing director Fergal Stanley said yesterday the company was disappointed, but added that it would be “business as usual”.
He added that its management would continue to focus on ensuring Argosy remained a significant player in the market.
Where both parties to an acquisition or merger have turnovers of €40 million a year or more they must inform the Competition Authority.
This did not apply to Eason and Argosy, as only one of them, Eason, has a turnover that passes that threshold. They voluntarily informed the authority.
This is the first case in which the Competition Authority has refused to approve a deal about which it was notified voluntarily.
Eason is planning to spend €20 million expanding its business. The company reported an 11 per cent decline in revenue to €266 million for the year to January 2012. Losses widened to €5.3 million on exceptional charges relating to redundancy costs and write-downs in the value of property. Argosy made a gross profit of €2.5 million and an operating profit of €84,000 for the year to January 2011.