News from Cass Business School

What about Wottakar’s?

Wednesday, 22 April, 2009

An audience of M&A industry practitioners and Cass faculty, alumni and students gathered at Cass recently to hear Alan Giles, Chairman of Fat Face, deliver the first in a new series of mergers and acquisitions workshops, sponsored by the M&A Research Centre at Cass Business School.

In 2006, Alan Giles, then CEO of HMV Group, began negotiations for the takeover of Ottakar’s, the main rival of HMV Group’s own book store, Waterstone’s. What was not clear at the start of the process was the unprecedented amount of coverage which this deal would cause from media attention to referral to the Competition Commission.

From HMV Group’s point of view, the acquisition of Ottakar’s made perfect sense. Both Ottakar’s and Waterstone’s had a similar operating philosophy and there were a number of obvious synergies, said Mr Giles. However, the merger of two of the leading bookstores in the UK was not warmly received by those in the publishing industry who saw their increased buying power and streamlined decision-making as a threat. This opposition led to the Competition Commission receiving an unusually high level of complaints’ many of which cited a concern about the loss of Ottakar’s distinctive book-buying experience’.
After much deliberation the Competition Commission passed the merger with emphatic dismissal of all points raised’. Their main argument was that competition from supermarkets and the internet would mean that the newly merged company would have little scope to raise prices on bestsellers or other titles. Despite this, HMV Group had learnt a lot of lessons which they used to make changes across the Waterstone’s chain, which included establishing localised customer service counters, re-designing their shop floors and improving their online offering.
After his talk, the audience had the rare opportunity to ask Mr Giles about his long history as a Chairman, CEO and Marketing Director in the retail industry for several firms. He was also able to compare the corporate experience to his current work with the Office of Fair Trading, where he is a non-executive board member.

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