American book giant may spark UK price war

BARNES & Noble, the American bookseller, is looking to enter the UK book market through a joint venture with Ottakar's the British chain that is planning a stock market flotation next month. The two companies have held discussions about working together on opening large book superstores in town centres.

Barnes & Noble's move would trigger a major shake-up in the UK book market, which has been rapidly consolidating over the last six months. It could spark a price war as it has built its reputation on cutting prices in order to drive sales higher and build market share.

It is also understood that Barnes & Noble looked closely at Dillons and Waterstone's, considering buying one or both of the chains before they joined forces as part of the new HMV Media Group.

James Heneage, Ottakar's managing director, would not confirm the talks but said: "We know the people at Barnes & Noble and we talk to them from time to time. But we are committed to the flotation and we believe this is the best way to take advantage of the opportunities in this dynamic market."

Barnes & Noble has been looking at the UK market for some time and had a team of staff here last year looking at potential sites. This was later disbanded. A deal with Ottakar's, which has 47 shops, would be a faster route to building a market presence than organic growth.

A deal could be a way of Ottakar's using Barnes & Noble's book buying power in the US where books are cheaper. This would give the American company greater volumes and enable them to learn more about the UK market.

Ottakar's stock market flotation will still go ahead next month and it is understood that the relationship between the two companies will not be formalised before then.

Barnes & Noble would be the second major US bookseller to enter the UK market in the last six months. Borders, another American book superstore retailer, snapped up the Books etc chain for pounds 40m last September just ahead of its planned stock market flotation.

Most of Ottakar's are small sites in market towns. However, it has opened two larger stores in Bromley and Aberdeen and is planning more.