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To: Skeeter Bug who wrote (5228)	6/9/1998 5:07:00 AM
From: zebraspot	Read Replies (2) \| Respond to of 164684

What's a fair price for a leading Internet Bookstore in the New Era? $15 million? ...$2 Billion?.. whatever... >>British Retailer W.H. Smith to Buy Europe's Largest Internet Bookstore By KIMBERLEY A. STRASSEL Staff Reporter of THE WALL STREET JOURNAL LONDON -- Hoping to carve out a place for itself in the fast-growing field of Internet bookselling, British retailer W.H. Smith Group PLC said it will buy bookshop.co.uk PLC, owner of the popular Internet Bookshop Ltd., for 9.4 million pounds ($15.4 million) in cash or stock. By buying Europe's largest Internet bookstore, W.H. Smith hopes to make up for what has otherwise been a late start in the Internet field. The deal also will give the still-small Internet Bookshop the necessary investment to grow in what has become an increasingly competitive market. The deal prices each bookshop.co.uk share at 265 pence ($4.33), valuing the company at 8.8 million pounds. Alternately, book shop.co.uk shareholders have the option of swapping eight new W.H. Smith shares for every 17 bookshop.co.uk shares. W.H. Smith also will pay 600,000 pounds to holders of bookshop.co.uk options. In Monday trading on the London Stock Exchange, W.H. Smith shares fell one pence to close at 555.5 pence. Shares in bookshop.co.uk, which are listed on OFEX, London's exchange for small companies, closed Friday at 85 pence. Trading results for Monday weren't immediately available. The deal is part of a push by W.H. Smith, which is in the middle of a strategic overhaul, to revive its flagging fortunes. This purchase not only allows the retailer to dabble in the promising field of electronic bookselling, but opens up the possibility of it expanding its electronic-commerce strategy to other core parts of its business, such as music and videos. W.H. Smith said it didn't expect any significant financial returns in the short term, but that it saw its Internet strategy as a positive contributor to its long-term earnings. The deal also comes at a crucial time for the Internet Bookshop, which has been growing quickly in Europe but has recently come under enormous pressure from new competitors. Amazon.com, the popular U.S. bookseller, recently entered the market by buying a small U.K. company called Bookpages Ltd. Meanwhile, German media giant Bertelsmann AG launched its own on-line bookstore, while most British bookstores have been busy carving out pieces of the on-line market for themselves. The Internet Bookshop said it would continue to operate under the Internet Bookshop brand and that the existing management team has agreed to remain with the business following completion of the deal. The company, started in 1993, posted 1997 sales of 2.1 million pounds compared with 568,000 pounds a year earlier. Rapid investment in the company meant that losses for 1997 widened to 406,000 pounds from 170,000 pounds a year earlier. <<