Quarto halts sale talks with mystery bidder

Quarto has terminated discussions with a potential bidder to acquire the company. 

Following what Quarto described as an "unsolicited" approach from an unnamed bidder five weeks ago but only revealed last week, it said negotiations had been halted on the "mutual agreement" of both parties. 

Anne Crompton, Quarto company secretary, said the discussions were “not progressing to the satisfaction of the board” after it “became clear that the regulatory approvals required by the bidder to complete the proposed acquisition were increasingly less likely to be granted on the timeline first indicated”.

Chief executive Marcus Leaver further told The Bookseller he did not want shareholders or staff to be "living in limbo" until March or April and that the staff he had spoken with since revealing today's decision were "universally ... very happy we're staying independent".

Crompton said: "Recognising the importance of delivering a strong finish to the year and after carefully considering the interests of all shareholders, the board was not prepared to prolong discussions further to avoid distraction to management at such a critical time of year for the business.

"Therefore, by mutual agreement, the board can confirm that it has terminated discussions with the potential acquirer."

She added the board "remains confident of the company’s prospects as an independent company and reconfirms the outlook statement provided in its half year results statement on 8th August 2017".

At that time, Quarto's interim financial results revealed a "lower than expected publishing performance", with revenues down 13% to $50.2m, following reduced footfall in stores in the US and UK, exacerbated by a period of transition for the company currently refocusing its efforts on its publishing business. But Quarto insisted it was "in good shape" to see in a much stronger second half.

Last week Leaver said that while there was no timetable for a decision to be made on the offer to acquire the company, he did not want the process to drag out.

Today (16th August) he said he welcomed the "clarity" brought by the decision to terminate negotiations as it enabled the company to focus on the "critical" second half of the year. 

Leaver added that negotiations with the party had "permanently ceased ... now", but on behalf of its shareholders and as a publicly listed company, it will continue to "listen" to "credible offers". In the five years Leaver has been c.e.o., this bid was the first "credible" offer it has had, Leaver said. 

"This was an unsolicited offer and while it was pitched at an attractive premium, the board considers it imperative that the company remains focused on delivering a strong finish to the year," he said. "I welcome the clarity which this decision brings. As I said at the time of the interim results, we have an excellent publishing programme for the autumn and the holiday period – one of our strongest in the last few years – and everyone at Quarto is fully focused on executing our plans and maximising the opportunities in the second half of the year.” 

He continued: "If it took until March or April, I don't think that for shareholders or for staff living in limbo would be good news. And what happens if we get that far and the regulator says 'no'? Because there's no certainty. 

"Negotiations have permanently ceased as far as I'm concerned now; I can't look into the future to say what I or the company might do in the future but we've been talking to this company for about five weeks and we didn't feel it was moving with the speed that we need at this time of year. Essentially we are a reasonably small company - possibly not small in publishing terms, but a reasonably small company - and in publishing this is a critical time of the year."

He added: "I spoke to a lot of the staff when we announced it this morning, and I think universally everybody is very happy we're staying independent. It's been a very good independent company for 41 years and I think everyone is very excited about continuing what is an exciting journey at Quarto."