International bookseller chain Borders Group is selling Paperchase Products to private equity firm Primary Capital for $31 million the company said in a statement Tuesday. Under the agreement, Borders Group will continue to purchase and stock products designed and sourced by Paperchase in its US branches.
After buying a majority interest in Paperchase in 2004, Michigan-based bookseller Borders said it would use $25 million of the proceeds to reduce the amount outstanding under its $90 million term loan credit facility with Lloyds TSB.
Primary Capital, known for mid-market management buyouts, was awarded preferred bidder status after a competitive process and collaborated with the Paperchase management team over several weeks to structure the deal according to a statement. The deal represents Primary’s eighth investment from its current Primary III fund.
Primary Capital’s chief investment officer, Neil Wallace, described the buyout as an opportunity to further expand Paperchase into markets abroad, a prospect made possible due to Borders’ exposure in the US market.
‘’Following Border’s marketing of Paperchase, we were excited by the potential to significantly grow the Paperchase retail estate in UK, both in stand-alone stores and in concessions. In addition, there is an opportunity for further development of overseas markets, both in Europe and in the US,’’ Wallace told PEO.
The company has previously been owned or targeted by private equity firms. London-headquartered Graphite Capital sold the company to Borders in 2004, which reportedly received offers for the greeting card and stationery retailer from Risk Capital and retailer WH Smith in 2008.
Paperchase, headquartered in London, has 65 stores in UK high streets, shopping centres and at stations, as well as 35 outlets in retailers including House of Fraser, Selfridges and Waterstones.