Tim Waterstone prepares bid to reclaim his book chain - The bookseller is preparing a bid for the business that bears his name

Zoe Wood writing in The Observer, Sunday 27 March 2011 Article history

Tim Waterstone is preparing a bid for his old book chain with Russian billionaire Alexander Mamut. Photograph Graeme Robertson for the Guardian

Tim Waterstone is working with Russian billionaire Alexander Mamut on a bid for Waterstone's and would take a senior role at the book chain that bears his name if they were to win control.

The retailer's struggling owner HMV Group has admitted that it was open to offers for the UK's biggest bookshop chain, with Mamut, who has built a 6.1% stake, seen to be the frontrunner. The business is expected to fetch about £75m, which would go some way towards repaying HMV's £130m debt.

It is not the first time that Waterstone has tried to regain control of the business he started in 1982 with a £6,000 redundancy payoff from WH Smith. Now in his early 70s, he has been involved in five previous bids, most recently in 2006. He and Mamut have worked together, albeit unsuccessfully, on Russian book retail venture Bookberry, which failed.

The Russian has considerable financial firepower, with his coffers set to be boosted further by the imminent stock market flotation of his mobile phone retail business Euroset. He has hired Credit Suisse to advise him. Waterstone could not be reached for comment.

Waterstone's, which made profits of £2.8m on sales of £513.6m last year, is the last dedicated high street bookseller and reports that restructuring specialists are circling it has caused alarm within the publishing industry.

Antony Beevor, the author of Stalingrad, said he would welcome the business being sold to Waterstone at a troubling time for the industry: "One thing we know about Tim Waterstone is that he is a lover of books and of bookselling. I have every admiration for what he did with Waterstone's in the early days." However Beevor said that the priority of any buyer should be to bolster Waterstone's website, which he described as its "achilles heel" because it was not up to the threat of major rivals such as Amazon, or the rise of e-book retailing.

Mamut and Waterstone have been assembling a management team with the vision of returning Waterstone's to its roots as a stock-holding book chain with knowledgeable staff.

HMV chief executive Simon Fox is in the midst of talks with the retailer's banks about relaxing the terms of its loans. He has admitted to neglecting Waterstone's, which has more than 300 branches, to concentrate on saving HMV, which has struggled as sales of CDs and DVDs go into freefall. He has expanded into live music as well as a tie-up with Curzon cinemas and devoted space in its stores to mobile phones and technology but that has not prevented two profit warnings this year.

Analysts say that even if HMV sells Waterstone's and its Canadian chain, it would still have to raise money by issuing new shares.