HMV increase bid pressure
HMV announced a 440p offer for Ottakar’s last night, surpassing the management’s team revised 400p bid. Two of Ottakar’s major shareholders have accepted the HMV offer, so any rival bidder would have to offer 484p or more to break these acceptances.
Analysts Numis consider an increase on the HMV offer is certainly beyond the reach of the Ottakars management team, and the only remaining alternative is Borders, the US giant which is also the number three player in the UK market. They suggest this is its last chance to get on an equal footing with Waterstone’s in terms of market share, and they wouldn’t rule it out altogether.
HMV has submitted a paper to the OFT in order to avoid the bid being referred to the Competition Commission. HMV can present a strong case that the presence of WH Smith, Amazon, Borders and Tesco in this market mean that it will remain highly competitive even with a merged Waterstone’s/Ottakar’s, but the risk of a referral cannot be ruled out completely.
