You snooze, you lose

8 February 2006 By John Foley Follow @johnsfoley

Permira s offer for the UK retailer is just 16% more than the prebid share price. Yet it shouldn t take much more to win investors over. Their best hope is a knockout breakup bid from former chairman Tim Waterstone. But he needs to show the money and soon.

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HMV's board rejected a preliminary approach from Permira of 190p. That values the group at £768m – a 16% premium to the price on January 27, the day before HMV first said it had been approached. HMV's board said the offer undervalued the group.

The music and book retailer has been seen as a vulnerable takeover target since it said that sales in its core UK & Ireland business had flagged 8.9% over Christmas, and that chief executive Alan Giles would leave at the end of 2006.

Tim Waterstone, founder of the group's Waterstone's bookshop business and onetime chairman of HMV, is planning a bid for the division with private equity backing, according to the Sunday Telegraph.

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