Talks resurrected with HMV Media over sale of Waterstone's bookshops

HMV Media is in discussions again about the possible sale of Waterstone's, its bookselling chain.

It is thought that the potential bidders include Bertelsmann, which owns the BOL online book business, and Borders, owners of the Books etc chain. Both parties held talks with HMV about buying Waterstone's last year. It is not clear what value the talks are attaching to the business.

No discussions are taking place with Tim Waterstone, the chain's founder, who failed with a takeover attempt in March after having a £180m offer rejected.

However, he is still thought to harbour hopes of regaining control of the business he founded in 1982.

Talks recently collapsed between HMV and Ottakar's, the rival book chain, over a possible £190m Waterstone's deal. However, the talks foundered over the complex nature of the transaction that would have involved Ottakar's going private, buying Waterstone's, with HMV retaining a stake.

HMV Media declined to comment on the fresh round of discussions. However, it seems HMV is still keen to sell the business in order to reduce its debts, which are in excess of £500m. HMV achieved some breathing space in April when it renegotiated its financing agreements with its banks, led by UBS Warburg and Merrill Lynch.

This means that HMV, led by Alan Giles, the former director of WH Smith, does not need to accept a firesale price for Waterstone's.

HMV Media was formed in 1998 through the purchase of Waterstone's from WH Smith and the HMV music stores from EMI. EMI remains a major shareholder, together with Advent International, the venture capital group.