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Borders Reaches Agreement to Sell Australia/New Zealand/Singapore Businesses to A&R Whitcoulls

Total transaction valued at up to $110M (AUD) and expected to close next week

ANN ARBOR, Mich., June 5 /PRNewswire-FirstCall/ -- Borders Group, Inc. (NYSE: BGP) today announced that it will sell 100 percent of its Australia/New Zealand/Singapore businesses -- which includes 30 Borders superstores -- to A&R Whitcoulls (ARW), the leading Australasian retailer of books and related products owned by private equity firm Pacific Equity Partners (PEP). The total transaction is valued at up to $110 million and is expected to close next week.

(Logo: http://www.newscom.com/cgi-bin/prnh/20060208/BORDERSGRPLOGO )

Upon closing of the transaction, Borders Group will receive proceeds of approximately $95 million (AUD) or approximately $90 million (USD based on current exchange rates). Additional deferred payments of up to $15 million (AUD) or approximately $14 million (USD based on current exchange rates) will be paid to Borders Group on or about March 31, 2009 if certain performance targets are achieved.

As part of the agreement, ARW, which owns and operates over 260 stores including Australia's oldest bookstore chain, Angus & Robertson, as well as popular New Zealand book, magazine and DVD retailer Whitcoulls, among other holdings, will have the right to use the Borders brand throughout Australia/New Zealand/Singapore consistent with a brand licensing pact that is part of the agreement.

"These businesses have performed well led by a talented management team who has consistently delivered strong execution in Borders superstores in Australia, New Zealand and Singapore," said Borders Group Chief Executive Officer George Jones. "This transaction represents an attractive valuation, permits us to forgo further investment in these businesses, and provides our company with a significant cash infusion to further reduce debt, which is one of our key financial initiatives. ARW is a well respected and highly successful retail company with outstanding leadership that will be strengthened with the addition of the local Borders executive team and our stores. We trust A&R Whitcoulls to successfully manage the Borders brand."

A&R Whitcoulls Group Managing Director, Ian Draper, said that the Borders assets are complementary to his company's existing holdings, offering a different yet enhanced shopping experience to Angus & Robertson in Australia and Whitcoulls in New Zealand. "Borders will bring a new dimension to our retail offerings," he said. "The customer-experience based model invites shoppers to browse with a vast range of books, music, movies and cafes in Borders stores. This model has proven popular in the local market and will complement our existing presence by targeting a different demographic through the premium format and vast selection of products."

Managing Director of Borders Asia Pacific, John Campradt, will continue to serve in his current role managing the Borders business. "Building the Borders brand throughout Australia, New Zealand and Singapore has been fulfilling," he said. "Now, we enter an exciting new chapter as part of ARW, which has welcomed our management team, our stores, and our people, and will provide the support we need to drive profitable growth."

About Borders Group

Headquartered in Ann Arbor, Mich., Borders Group, Inc. (NYSE: BGP) is a leading global retailer of books, music and movies. Through its subsidiaries, Borders Group employs approximately 30,000 people and operates over 1,100 stores worldwide, as well as the newly launched Borders.com. More information on the company is available at www.borders.com .

About A&R Whitcoulls

A&R Whitcoulls is a leading book and stationery retailer in Australia and New Zealand. A&R Whitcoulls currently operates four divisions:

  • Whitcoulls - A nationwide book and stationery chain with the largest share of the New Zealand market. Within the Whitcoulls division, Bennetts Tertiary sells textbooks and related course materials to students and other campus users.
  • Calendar Club - A chain of specialty calendar stores which operate over the Christmas period (October to January) in major shopping centers and other key retail precincts in both Australia and New Zealand.
  • Angus & Robertson - A nationwide bookstore chain with the largest market share in Australia.
  • Supanews - A joint venture business that operates newsagencies in Australia.

The Whitcoulls and Angus & Robertson brands are well known and established in their respective markets and have histories dating back over 100 years. Pacific Equity Partners acquired the Group from the UK retailer, WH Smith, in May 2004.

About PEP

PEP is the most active private equity fund in Australia and New Zealand, providing strategic management experience and capital resources to grow companies in a range of business situations. PEP Fund IV is the largest private equity fund in Australia and the firm has over $6.0 billion of equity funds under management. Since its establishment in 1998, PEP has made 18 portfolio company acquisitions and more than 20 add-on acquisitions at the company level.

PEP currently has 13 companies in its portfolio with combined revenues in excess of $3 billion per annum, spanning industries including food, liquor, technology, financial record-keeping and retail trade. Recent PEP investments include:

  • American Stock Transfer & Trust (AST) - The largest independent share registry in the US by issuer number.
  • Hoyts Group - A leading cinema exhibitor and advertiser in Australia and New Zealand.
  • Veda Advantage - The leading provider of business and financial intelligence services through the use of financial record-keeping, analytics and technology.
  • Independent Liquor - A leading manufacturer and distributor of alcoholic beverages in Australia and New Zealand, with a particular focus in the ready-to-drink (RTD) category.
  • Australian Administration Services (AAS) - A provider of administration services to the superannuation and retail master trust industries. AAS has been merged with Link Market Services, a share registrar and analytic business also owned by PEP.

Detailed information about PEP's entire portfolio and its exited investments can be found at www.pep.com.au .

Borders Group Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. One can identify these forward-looking statements by the use of words such as "projects," "expected," "estimated," "look toward," "going forward," "continuing," "planning," "returning," "guidance," "goal," "will," "may," "intend," "anticipates," and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address matters such as the company's future financial performance (including earnings per share, EBIT margins and inventory turns, liquidity, same-store sales, cost reduction initiatives, and anticipated capital expenditures and depreciation and amortization amounts), its exploration of strategic alternatives, its financing agreement with Pershing Square and the benefits thereof, the closing of the sale of the company's Australia/New Zealand/Singapore subsidiaries, strategic plans and expected financing and benefits relating to such plans (including steps to be taken to improve the performance of domestic superstores, the downsizing of the Waldenbooks Specialty Retail Segment and the new proprietary Web site and its roll out to superstores).

These statements are subject to risks and uncertainties that could cause actual results and plans to differ materially from those included in the company's forward-looking statements. These risks and uncertainties include, but are not limited to, consumer demand for the company's products, particularly during the holiday season, which is believed to be related to general economic and geopolitical conditions, competition and other factors; the availability of adequate capital to fund the company's operations and to carry out its strategic plans; the performance of the company's information technology systems and the development of improvements to the systems necessary to implement the company's strategic plan, and, with respect to the exploration of strategic alternatives including the sale of certain parts of the company or the sale of the entire company, the ability to attract interested third parties.

The company's periodic reports filed from time to time with the Securities and Exchange Commission contain more detailed discussions of these and other risk factors that could cause actual results and plans to differ materially from those included in the forward-looking statements, and those discussions are incorporated herein by reference. The company does not undertake any obligation to update forward-looking statements.

SOURCE Borders Group, Inc.

CONTACT: Investors, Ed Wilhelm, +1-734-477-4245, or Media, Anne Roman,
+1-734-477-1392, both for Borders Group, Inc.

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