Waterstones owner Elliott gatecrashes Majestic party

The investment giant which owns Waterstones, the British-based bookseller, has gatecrashed the £100m auction of Majestic Wine’s store network as the listed retailer plots a retreat from British high streets.

Sky News has learnt that Elliott Advisors – a division of which last week agreed to buy the American bookseller Barnes & Noble for more than $680m (£534m) – has lodged a bid for Majestic’s 200 outlets.

The bid pits it against rival suitors including OpCapita and Fortress, the investment group which is owned by Japan’s SoftBank.

Elliott’s presence in the auction will heighten expectations among Majestic Wine shareholders that the company can achieve an attractive price for its physical retail portfolio as it shifts its focus to its digital brand, Naked Wines.

Majestic’s chief executive, Rowan Gormley, is due to update the City on its strategic plans on Thursday, and is expected to say that a sale of its store estate is now its preferred option.

Elliott is best-known as an activist investor, and has struck fear into boardrooms around the world by taking stakes in major listed companies such as Hammerson, the British commercial property group, Telecom Italia and Pernod Ricard, the French spirits group.

However, it has also become increasingly active as an acquirer of businesses in its own right, having bought Waterstones last year and recruited Paul Best from the buyout firm Warburg Pincus to lead its private equity activities.

The status of Elliott’s interest in Majestic’s store portfolio was unclear on Wednesday.

A spokeswoman for the firm declined to comment on its bid.

Majestic wants to deploy the capital generated by a sale of its roughly 200 stores to accelerate the growth of its Naked Wines business.

As part of the company’s revamp under chief executive Rowan Gormley, the wine producer and distributor also plans to change its corporate name to Naked Wines.

The strategic shift highlights the pressure that Britain’s biggest specialist wine retailer has been facing from supermarket chains, as well as the broader headwinds afflicting high street chains in the form of rising costs and shaky consumer sentiment.

It is unclear what Majestic’s board intends to do with its store network if bidders do not meet the £100m asking price.

A plethora of prominent retailers have either gone bust or turned to emergency restructuring procedures to shut stores and slash rent bills in recent months.

Sir Philip Green’s Arcadia Group was due to learn its fate later on Wednesday afternoon as creditors voted on a restructuring plan that would see dozens of stores closed and landlords forced to accept steep rent cuts in exchange for a 20% stake in the company.

Meanwhile, Debenhams is facing a legal challenge from Mike Ashley’s Sports Direct International and a number of landlords to its own restructuring programme.

Majestic, which has seen its shares fall by about 40% in the past 12 months, at least has the advantage of a thriving digital operation to offer encouragement about its future performance.

In its most recent update to the City, it said it was on track to meet a £500m sales target this year, and that the one-off costs of exiting retail stores could “largely be recouped through asset disposals”.

Majestic is being advised by bankers at Rothschild on the sale process.

The wine retailer declined to comment beyond an earlier statement which said: “The combination of customer migration, disposals and store closures from Majestic Retail will release substantial investment capital and transform the company into an out-and-out growth business.

“While a total sale of Majestic Retail continues to be a potential option, it would be wholly unwise to pursue a single-track process and materially limit the potential value that can be realised to drive growth.”

(c) Sky News 2019: Waterstones owner Elliott gatecrashes Majestic party