The retailer has hired J.P. Morgan Securities and Merrill Lynch & Co. to assist it in the process of weighing various strategic alternatives. The company has also received a commitment from Pershing Square Capital Management to lend it $42.5 million for operations. Additionally the New York City-based fund, which is Borders' largest shareholder, has also agreed to acquire the retailer's British Paperchase chain, which has about 100 stores, as well as Borders' 21 namesake stores in Australia, its five in New Zealand and two in Singapore.
Borders has until April 4 to find a better offer for its international operations. In fact, Jones said that one of the reasons the company is pursuing a sale is because a proposed deal to sell the Australia and New Zealand stores fell through because of financing issues.
Some analysts on the company's conference call seemed perplexed that Borders is looking at a sale now, after the retailer came of a relatively stable financial fourth quarter. The company brought $84.7 million from continuing operations, compared to $87.7 million during the same year-ago period. Same-store sales at Borders stores rose 2.1% year over year, while Waldenbooks reported a 1.2% increase.
"We're trying to be really, really prudent," Jones responded.
Borders operates 509 superstores in the US. The company also owns the 490-store Waldenbooks chain, which is found mainly in malls. Last month the company opened a new prototype for its superstores here and the retailer has 13 more planned for the coming year.
Pershing Square also owns shares of Target Corp., Barnes & Noble, Wendy's International and other retailers, according to SEC filings. The firm was founded by investor William Ackman.
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