It's
not a secret that earlier this year, troubled Borders hired a pair of Wall Street investment banks to explore "strategic alternatives," including a sale of the company. Luckily (for them), a sale has been avoided so far. Instead, the bookstore chain
announced today that it would sell its 30 superstores in Australia, Singapore, and New Zealand to the area's leading book retailer.
Quote:
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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.
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And what should they do with an additional financing of around $90 million, besides reducing their debt?
The Motley Fool
has the answer (on the off-chance it didn't immediately pop to your mind):
Quote:
Borders isn't going away, but times have changed in the bookselling industry... Online discounters like Amazon.com and Overstock.com are now chiseling away at the big-box bookstores' market share. Superstore chains will also eventually worry about e-book readers like Amazon's Kindle and Sony's Reader, since digital delivery has little need for an old-school intermediary.
Instead of paying down its debt, Borders should earmark those funds to dream up a Kindle killer while Amazon's reader is still vulnerable in the crib. Absent that, bookselling superstores will only continue to fade in relevance. If Borders doesn't evolve, losing a foothold in Oz will be the least of its worries.
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