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Last Updated: Thursday, 8 September 2005, 16:13 GMT 17:13 UK
HMV ups stakes in bookshop battle
Ottakar's branch
Ottakar's is now at the centre of a bidding battle
Entertainment retailer HMV Group has launched a takeover bid for Ottakar's bookstores, trumping an offer by the chain's management.

HMV - which also owns the bookseller chain Waterstone's - tabled a bid of 440p, or 96.4m ($177m).

If successful, the merged bookstore chain would control 23% of the market, raising competition concerns.

Earlier, this week the directors had backed a 4-a-share offer worth 91m ($168m) bid from the chain's founders.

In a statement, HMV added it would seek a recommendation from Ottakar's independent directors.

The store portfolios of Ottakar's and Waterstone's are highly complementary
HMV chief Alan Giles

Shares in the group surged on news of the higher HMV bid, rising 7.36% - or 30p - to close at 437.5p on Thursday.

However, along with its latest offer, HMV revealed investors holding 30% of Ottakar's shares had backed its higher offer.

'Better positioned'

"The store portfolios of Ottakar's and Waterstone's are highly complementary and the combined group will be better positioned to provide customers with a wider and more relevant choice of titles and an attractive programme of promotional offers," HMV chief executive Alan Giles said.

The latest offer from HMV came just two days after managing director James Heneage and chairman Philip Dunne increased their offer price by 50p per share from an original offer of 350p made last month.

Mr Heneage and Mr Dunne's Book Store Acquisitions bid vehicle is being backed by private equity firm Phoenix Equity Partners.

"We are pleased to demonstrate our confidence in Ottakar's business through this higher offer," said Hugh Lenon, managing partner of Phoenix.

"We believe it is at a highly attractive level, offers certainty and has strong shareholder support."

Ottakar's was founded in 1987 and today has 137 stores across the UK.

It has recently struggled against the growth in supermarkets selling books, and the success of online retailers.

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