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Waterstones opens talks for takeover with Elliot Advisors

Specialist book retailer Waterstones has started talks with Elliott Advisors, the hedge fund that took Game Digital onto the stock market four years ago.

A period of exclusivity has been granted to Elliot by the book retailer to work on a deal before being opened to a wider market, according to Sky News.

The price tag is thought to be much lower than the £250m that Waterstones owner, Russian billionaire Alexander Mamut was asking for the chain last autumn.

Mamut bought Waterstones from HMV in 2011. In 2016 the retailer made its first profit since the acquisition, with financial figures in the year to April 2016 showing an 82% jump in profits to £18m.

It is thought Mamut needs the sale to help raise cash following the crisis at Otkritie Bank, where he is among one of the biggest shareholders.

Waterstones currently operates out of 274 stores across the UK.

Discussing a possible sale late last year, Waterstones chief executive, James Daunt, said: “It’s certainly the right moment for him to sell us, (if you follow) the logic of turning a business round and making it profitable, demonstrating that that’s sustainable, then selling it.

“We are a nice business. We make good money. We’re relatively insulated from the wider retail economy because book buyers tend to continue to buy books even if they stop buying washing machines.

“If you’re interested in retail assets in the UK, we’re a pretty attractive one, and obviously we’re growing. We’ve got a very strong position within the market. It makes good sense that somebody should buy us.”

It is thought a number of other private equity buyers are waiting to talk to Waterstones should the Elliot Advisors talks prove unsuccessful.