Ann Arbor, MI — Borders Group, Inc. has entered into an asset purchase agreement with Direct Brands. If the deal is reached, Borders would operate as a wholly owned subsidiary of Direct Brands.
Ann Arbor, MI — Borders Group, Inc. has entered into an asset purchase agreement with Direct Brands, a portfolio company of Najafi Companies, and intends to move forward with submitting the agreement to the court to serve as the “stalking horse” bid for a court-supervised auction of the business under Section 363 of the U.S. Bankruptcy Code. Borders believes a sale provides the best path forward to reposition the business for a successful future and to maximize value for the company’s stakeholders.
Under the terms of the agreement and subject to further due diligence, Direct Brands would purchase substantially all of the company’s assets for $215.1 million plus the assumption of approximately $220 million of liabilities, subject to the auction and bankruptcy court approval. Najafi Companies is a Phoenix-based private investment company with extensive experience in several customer-focused businesses. The firm acquired Direct Brands in 2008, including Book-of-the-Month Club, Doubleday Book Clubs and Columbia House. The tentative purchase agreement will occur prior to the court hearing on July 21.
If consummated and under the terms of the agreement, Borders would operate as a wholly owned subsidiary of Direct Brands. As part of the agreement with Direct Brands, Hilco and Gordon Brothers have agreed to acquire any store locations that are ultimately not included in the sale and will close those stores in an orderly manner.
Under its turnaround plan, Borders introduced a revitalized in-store experience particularly with respect to its Kids offering and a new Borders Cafe program in its superstores featuring a new cafe design and tailored menu items. On the digital front, Borders is capturing a larger share of the eBook market through an expanded partnership with Kobo.
The company anticipates completing the sale process by late July.