Chapters Gets Electronic White Knight

Leah Eichler |

Jan 22, 2001

News
Chapters Gets Electronic White Knight Leah Eichler -- 1/22/01 *Future Shop Ltd. makes a bid for $200 million* The hostile bid by Trilogy to merge Chapters Inc. and Indigo has seemingly come to an end, following an announcement by Future Shop Ltd., an electronics superstore chain, that it will purchase Canada's largest bookstore chain for $200 million ($133.3 million)--an offer that surpasses Trilogy's partial bid of $73 million ($48.6 million). The Canadian retailer and e-tailer of consumer electronic products said it would offer $16.80 per share ($11.20), in cash, for 100% of Chapters, more than the $15 ($10) offered by Trilogy in its partial bid for 50.1% of Chapters' shares. Chapters' shareholders have the option to receive $16 in cash or two Future Shop shares for each of their Chapters' shares, in a deal that is expected to close by mid-March. "The chance to create a powerhouse Canadian retailer like this d sn't come around very often," said Kevin Layden, president and COO of Future Shop. "Future Shop and Chapters are outstanding, well-established, strong Canadian retail companies. Acquiring Chapters fits into our business model and our strategic plan, which calls for reaching $5 billion in sales in five years. It is complementary to our existing growth strategy, based on the four main tenets: selling boxes, selling content associated with boxes, selling connections, and services. Chapters fits into the boxes and content elements of our growth strategy." Future Shop has 88 superstores, five Computer City stores and an online electronics store, at futureshop.ca. "This is a terrific deal for Chapters' shareholders," said Larry Stevenson, CEO of Chapters. "Both companies are strong, profitable retailers; both are successful online retailers; and their products complement one another. This deal will boost our buying power and allow us to add new products." Future Shop will continue with Chapters' vision to acquire minority interests in Chapters Online and Pegasus. Chapters' shareholders who have already tendered their shares in response to the Trilogy offer have until January 22 to withdraw their shares and be in a position to accept the higher offer from Future Shop. "We are very confident recommending to our shareholders that they accept the offer from Future Shop," Stevenson added. "Future Shop's strong financial results are a big plus in evaluating this deal, considering the potential for current Chapters' shareholders to have a stake in Future Shop after the acquisition. Unlike the Trilogy offer, Chapters' shareholders have a full and complete offer from Future Shop, and the chance to invest in an established, profitable company with real potential for growth." Representatives from Trilogy were unavailable to comment on the deal last week.

News

Chapters Gets Electronic White Knight
Leah Eichler -- 1/22/01
Future Shop Ltd. makes a bid for $200 million

The hostile bid by Trilogy to merge Chapters Inc. and Indigo has seemingly come to an end, following an announcement by Future Shop Ltd., an electronics superstore chain, that it will purchase Canada's largest bookstore chain for $200 million ($133.3 million)--an offer that surpasses Trilogy's partial bid of $73 million ($48.6 million).

The Canadian retailer and e-tailer of consumer electronic products said it would offer $16.80 per share ($11.20), in cash, for 100% of Chapters, more than the $15 ($10) offered by Trilogy in its partial bid for 50.1% of Chapters' shares. Chapters' shareholders have the option to receive $16 in cash or two Future Shop shares for each of their Chapters' shares, in a deal that is expected to close by mid-March.

"The chance to create a powerhouse Canadian retailer like this d sn't come around very often," said Kevin Layden, president and COO of Future Shop. "Future Shop and Chapters are outstanding, well-established, strong Canadian retail companies. Acquiring Chapters fits into our business model and our strategic plan, which calls for reaching $5 billion in sales in five years. It is complementary to our existing growth strategy, based on the four main tenets: selling boxes, selling content associated with boxes, selling connections, and services. Chapters fits into the boxes and content elements of our growth strategy."

Future Shop has 88 superstores, five Computer City stores and an online electronics store, at futureshop.ca. "This is a terrific deal for Chapters' shareholders," said Larry Stevenson, CEO of Chapters. "Both companies are strong, profitable retailers; both are successful online retailers; and their products complement one another. This deal will boost our buying power and allow us to add new products."

Future Shop will continue with Chapters' vision to acquire minority interests in Chapters Online and Pegasus.

Chapters' shareholders who have already tendered their shares in response to the Trilogy offer have until January 22 to withdraw their shares and be in a position to accept the higher offer from Future Shop.

"We are very confident recommending to our shareholders that they accept the offer from Future Shop," Stevenson added. "Future Shop's strong financial results are a big plus in evaluating this deal, considering the potential for current Chapters' shareholders to have a stake in Future Shop after the acquisition. Unlike the Trilogy offer, Chapters' shareholders have a full and complete offer from Future Shop, and the chance to invest in an established, profitable company with real potential for growth."

Representatives from Trilogy were unavailable to comment on the deal last week.

A version of this article appeared in the 01/22/2001 issue of Publishers Weekly under the headline: