Bankrupt books and music merchant Borders Group has accepted a stalking horse bid from direct music and books seller Direct Brands worth more than $435 million.
(PHOTO GALLERY: Who filed for Chapter 11 bankruptcy protection in the first half of 2011)
Direct Brands, a portfolio company of Najafi Companies, owns direct sellers Book-of-the-Month Club, Doubleday Book Clubs and Columbia House.
Under terms of the agreement, Direct Brands will pay $251.1 million for Borders’ assets and assume $220 million in liabilities should it not be outbid prior to a U.S. Bankruptcy Court hearing on July 21. If approved by the court, Borders would run as a wholly-owned subsidiary of Direct Brands.
As part of the deal, Direct Brands says private investment firms Hilco Consumer Capital Corp. and Gordon Brothers Group will acquire any Borders store locations that are not included in the sale and will liquidate them.
Under its turnaround plan, Borders introduced a new in-store experience for its kids section and its Borders Café coffee houses. It also expanded a digital partnership with ebook seller Kobo to provide its customers access to Kobo’s inventory, and to sell Kobo’s new ereader in its stores.
In February, Borders sought protection from its creditors in the U.S. Bankruptcy Court in Manhattan. According to the filing, Borders had $1.28 billion in assets and $1.29 billion in debts as of Dec. 25.