British retailer HMV has agreed to buy bookseller Ottakar's for a cut-price £62.8 million sterling to help its own books chain cope with stiff competition from supermarkets and the Internet.
HMV, which runs Waterstone's bookstores, said this morning it had agreed to pay 285 pence in cash for each Ottakar's share, well below the 440p it originally agreed to pay in September.
That original deal was delayed by an investigation by competition regulators and then, after clearance was received, HMV pulled out amid a downturn in trading at book shops.
HMV, which has itself fended off two bid approaches from private equity firm Permira as well as an attempt to buy Waterstone's by founder Tim Waterstone, said buying Ottakar's would allow it to benefit from economies of scale.
It added the deal would boost earnings, excluding exceptional items, from the first full year of ownership.
"Over the past year the book market has undergone a significant change with new levels of competition from the supermarkets and on-line retailers impacting all specialist booksellers and in particular those with insufficient scale to compete on equal terms," Ottakar's chairman Philip Dunne said in a statement, explaining why he was backing HMV's offer.
HMV shares closed at 162-3/4 pence yesterday, valuing the business at about £657 million. Ottakar's shares closed at 287p, just above HMV's offer price.