Waterstones heads into its critical next chapter

Cantillon: Bookseller plots expansion under new owners – and in Amazon’s shadow

A change of ownership can be relied upon to heighten tensions among both the staff of a business and anybody whose livelihood depends on it. The proposed sale of bookseller Waterstones to activist hedge fund Elliott Advisors certainly adheres to the rule. As acquisitions go, it is a proper page-turner.

On Thursday, when the deal was announced, the talk was of accelerated expansion plans. Waterstones currently has 283 bookshops, seven of them – including Dublin's Hodges Figgis – in Ireland. Managing director James Daunt dismissed the idea that closures might be imminent as a result of the sale, saying the opposite was the case. The chain is "very much in expansion mode" and a new owner "with a certain amount of firepower" will allow it to grow further.

Elliott Advisors is a unit of New York-based Elliott Management, which has more than $31 billion (€26 billion) in assets under management and is led by billionaire Paul Singer. The fact that such outfits don't make business decisions based on their love of a good novel can be seen as a good sign for the financials behind physical book retailing. However, many in the book trade are reserving judgment.

Every book that changes hands over a physical counter does so in the shadow of Amazon. Recent years have seen some upward momentum for printed book sales, although the industry can seem overexposed to fads (such as the adult colouring-book craze) or a tiny number of runaway hits (hello "body coach" Joe Wicks of Lean in 15 fame). The feeling that the remaining book retail multiples are only ever one poor Christmas season away from an entire re-evaluation of their business strategy never quite goes away.


Waterstones itself has been here before. In 2011, the then owner of HMV Group closed 20 outlets, including the 24-year-old shop on Dublin's Dawson Street, as part of a debt-triggered restructuring. The book chain's sale to Russian oligarch Alexander Mamut nevertheless turned out to be a successful, life-extending move, in part because Mamut's choice to run the business, the founder of London mini-chain Daunt Books, was so well-regarded by publishers.

That Daunt – the antithesis of a pile-them-high, flog-them-cheap merchant – will continue to run Waterstones under its next ownership suggests this story will have a happy ending. But don’t rule out any savage blows until the final page.