The sale of the Borders bookshop operations in Australia and New Zealand appears imminent.

While some media are reporting Pacific Equity Partners has lodged an indicative bid for the Australasian operations in the region of $100 million, Borders’ US head office overnight announced the sale of the UK and Irish business to another private equity company. That, too, is part of a strategy to reduce its overseas interests so as to focus on its struggling US core business.

PEP owns the Angus & Robertson business in Australia and the Whitcoulls Group in New Zealand. It is widely been assumed to be the frontrunner for the purchase, although rival chain Dymocks is also in the running.

Anouncing the northern hemisphere sale, Borders US said of the Australian divestment only “that process continues”.

Risk Capital Partners, a London-based private equity investor, has set up a new, wholly-owned subsidiary company (Bookshop Acquisitions Ltd.) for the purpose of acquiring Borders UK and Ireland. It will pay US$20 million up-front in cash and a further $20 million in deferred cash consideration, contingent on the future performance of the business. In addition, Borders Group will receive an equity interest of approximately 17% in Bookshop Acquisitions Ltd, thus maintaining a stake in the business.

The transaction includes all 41 Borders superstores located in the UK and the Borders superstore in Ireland, as well as all 28 Books etc. stores in the UK Risk Capital Partners also retains the right to use the Borders and Books etc. brand names consistent with a brand licensing agreement as part of the acquisition.

Not included in the sale is the company's successful Paperchase operation, which includes shops within existing Borders stores in the U.K. and Ireland, and in Borders superstores in the US, as well as its freestanding stores in the UK Paperchase will continue to operate as it has with Borders Group retaining worldwide ownership.

The Borders UK and Ireland management team will continue to be led by David Roche, who will serve as CEO of the new company.

"The sale of our U.K. and Ireland subsidiaries is a major step forward in our previously announced strategic plan to drive a turnaround of Borders Group," said CEO George Jones. "This sale allows us to focus investment and resources on our core business, which is the US superstore segment, and gives the U.K. and Ireland business the opportunity to succeed with the focus and investment Risk Capital Partners will bring. In addition, the equity interest Borders Group received allows our company to participate in the potential future upside of the UK business."

Luke Johnson, chairman of Risk Capital Partners said: "We are excited by the opportunity presented by Borders UK and Ireland and pleased that Borders Group will have an equity position in the new company. We intend to build on the strength of the business and this well-respected brand as one of the UK's largest book retailers. Our strategy will focus on improving sales and optimising the store base while improving margins and inventory management."

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