Hilco UK has bought HMV Group’s Canadian business in a move to help the entertainment retailer turn its domestic operations around, it was confirmed today.
A total cash consideration of £2 million was paid by the private equity and restructuring specialist to HMV for the acquisition and as part of the deal HMV will retain part of the intercompany debt owed to it by its Canadian arm.
HMV Canada was established in 1986 and achieved sales of £222 million and an operating profit of £2.3 million for the year ending April 24th 2010.
Simon Fox, CEO of HMV, said: “The board has fully explored the options available to it for HMV Canada, and believes that a sale to Hilco is the correct decision for the business at this time, whilst reducing the operating leverage in the continuing group.
“Having received shareholder approval for the disposal of Waterstone’s, and with a refinancing in place, the group is focusing on clear and tightly defined plans for transforming HMV into a broad-based entertainment business.”
HMV sold its bookshop business Waterstone’s in May to a firm fronted by one of its major shareholders Alexander Mamut, allowing it to focus on its main product lines of music and video.
It is part of a bigger transformation process which the company has been undergoing in order to avoid administration, with live music events, home electronics and downloads becoming a bigger part of operations.
This is the second transaction of a retailer Hilco has been involved in this month, having disposed of furniture and homewares retailer Habitat last week as it fell into administration.