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Analysts back Johnson buyout of Borders

29.08.07 Graeme Neill

Retail analysts have backed a possible buyout of Borders led by Channel 4 chairman Luke Johnson, claiming that the former Pizza Express man would be a "viable" buyer with "a very good track record".

Johnson's private equity company Risk Capital Partners is believed to be behind David Roche's management buyout of Borders UK and Ireland business. A decision on the future of the business is expected "imminently" with Johnson and Roche believed to be in pole position for control of the retailer. A bid for the business will have been helped by the financial figures released late yesterday by parent Borders Group, which showed strong sales growth and narrowing losses at its international stores.

Analysts were positive about the entrepreneur who had been acclaimed for turning Pizza Express into a company worth £500m. "He's first class; a very well regarded and able businessman," said Richard Ratner of Seymour Pierce. Another retail analyst suggested Johnson was a "viable" buyer for the business. "He runs a very well set up private equity firm," he said. "He's got great contacts in the City and a very good track record."

However, fears were expressed about Borders' viability as a stand alone business. "Luke Johnson is a sharp cookie with a good record in restaurants etc but I don't see the attraction for him in Borders," said Nick Bubb of Pali International. Ratner added: "You do have to ask how much money this business can make on a standalone basis. But Luke is no fool."

Johnson is understood to be keen to retain Borders' identity and its commitment to promoting independent publishers. Despite a difficult market for high street booksellers, Risk Capital Partners is believed to be confident that it can cut costs at Borders and turn the business around. While some closures of underperforming stores are expected if the deal goes through, it is believed that the private equity firm would retain most of Borders' 70 branches.

Read Neill Denny's blog on Luke Johnson here. 

Retail Borders Graeme Neill Luke Johnson

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