Wall Street Journal
By Mike Spector and Jeffrey A. Trachtenberg
Borders Group Inc. is in discussions with a potential bidder for more than 225 stores that would keep the bookstore chain operating as a going concern, said people familiar with the matter.
Borders, which filed for Chapter 11 bankruptcy protection in February, has been soliciting offers for the company as it attempts to survive amid mounting losses. The possible bidder, whose identity couldn't be learned, has expressed interest in more than 190 of the chain's remaining superstores, the large retail outlets that garner the bulk of the company's revenues, those people said.
The people cautioned that talks remain at an early stage and could fall through.
Borders hasn't received interest from any bidders in purchasing all of its about 400 outlets, the people said.
"We are focused on moving forward with the execution of our business plan," Borders said in a statement. "We are continuing to evaluate interest in the company as expressed through the ongoing Chapter 11 process."
Borders has been trying to reorganize and emerge from bankruptcy protection by summer's end. But the company needs publishers to relax terms under which they ship books to the retailer. So far, publishers have been demanding cash-on-delivery for books shipped to the chain, squeezing Borders. The firm owes the six largest publishers $182 million, according to court papers.
A soft deadline for potential Borders bids passed May 6, the people said. But they said Borders remains in discussions with a handful of potential suitors. Barnes & Noble Inc. recently offered to buy 10 stores, along with the company's website and customer lists, these people said. Borders wasn't keen on the offer, one of these people said.
A Barnes & Noble spokeswoman said she could neither confirm nor deny the chain's bid.
Bloomberg News earlier reported news of the Borders bidding process.
Borders has closed more than 200 stores since filing for bankruptcy protection. The chain could be forced to liquidate in the event it can't sell the bulk of its stores, the people familiar with the matter said. Borders lost $24.3 million in March, according to court documents.
In recent days, an executive at a leading publisher said the firm would keep an open mind regarding terms with the chain, noting that there is considerable value for publishers in having Borders continue to operate. Many in publishing believe that in-store browsing continues to be the most effective way for readers to discover new titles.
But a second publishing executive indicated that there was little possibility that their publishing house would resume normal trade terms with Borders in the near future.
Any new owner of Borders will face serious challenges. Sales of hardcover books, long a key profit center for booksellers, continue to decline as increasing numbers of consumers buy their titles digitally. The basic premise of the superstore chains, that readers would benefit from massive selections of 100,000 titles or more, has lost much of its original appeal because online sellers are able to offer access to far more books. Increasingly, Borders and Barnes & Noble have turned to children's games and toys, among other non-book items, to generate sales.
Further, Borders has fallen behind on the digital front, which is the fastest-growing segment of the book publishing and book retailing business. Borders sells e-books to its customers through a bookstore powered by Kobo Inc., a Toronto-based e-retailer in which it is an investor. Borders also lacks its own branded e-reader; by contrast, Barnes & Noble's Nook is at the center of its digital strategy, while Amazon.com Inc. boasts its Kindle e-reader.
