Hilco rescues UK music retailer HMV in a reported $76 million deal
05 April 2013
Hilco, the UK-based retail restructuring specialist, today acquired the business and part of assets of HMV, the iconic entertainment retailer, from its administrators, Deloitte for a reported £50 million ($76 million).
The business includes 141 stores, 25 of which had previously been slated for closure by Deloitte, and approximately 2,500 employees. All nine Fopp stores are also included in the purchase.
Paul McGowan, CEO of Hilco, said, ''We have spent a number of weeks negotiating revised terms with landlords and the key suppliers to the business, all of whom have been supportive of our plans to maintain an entertainment retailer on the High Street.''
''We hope to replicate some of the success we have had in the Canadian market with the HMV Canada business which we acquired almost two years ago and which is now trading strongly. The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the UK business but we believe it has a successful future ahead of it.''
The HMV UK business will initially be led by a Hilco team working alongside existing management. The Hilco team will be led by Ian Topping, the former CEO of Steinhoff Group in the UK, and Henry Foster, an investment director at Hilco, while Paul McGowan will take up the role of chairman of the new business.
Hilco has also confirmed that it is in negotiations with a number of landlords with a view to re-establishing an HMV business in the Republic of Ireland after Rreceivers there closed the business shortly after their appointment.
Deloitte had been trying to find a buyer for all or parts of HMV, after the 92 year-old retail chain was hit by a declining CD, DVD and video games markets amid intensifying competition from supermarkets and online rivals.
London-based Hilco, a leader in retail restructuring with involvement in many notable projects in the UK and in continental Europe, was poised to sign a binding agreement to save HMV, especially after it bought its debt soon after it entered into administration.
In 2011, Hilco bought HMV Canada from parent HMV group for £2 million, with the support of HMV's key suppliers.
HMV, which opened its first store in London in 1921, had 223 UK stores and employed 4,123 staff, before its collapse into administration.
Deloitte has shut around 100 locations and planned to leave the retailer with a "residual portfolio" of 116 stores.
The retail chain failed to keep pace with the changes that took place in music technology in the last two decades, which has shifted to the digital platform, perhaps one of the most significant developments in the music industry.
But despite its problems, HMV still has a one-fifth market share in the music and DVD market in the UK.
Hilco has been in talks with HMV suppliers, including record labels and film studios, whose support is vital for the future of the company.