ALEX BRUMMER: Waterstones owner pushes the books

The book trade is going through a wonderful moment. On Super Thursday this week, as publishers flooded the market with potential Christmas bestsellers, a record 1,900 titles were released.

This is a sharp increase compared to the figure of 1,286 affected by the 2023 pandemic.

There seems little doubt that Boris Johnson’s memoirs Unleashed (serialized in the Daily Mail) will quickly top the best-seller list. For Christmas, other writers – including comedian and actress Miranda Hart, murder mystery specialist Richard Osman and more literary authors Kate Mosse and Ian Rankin – can be expected to do well.

Savvy British publisher Bloomsbury, home of JK Rowling, is looking for titles like Rowan Jacobsen’s Wild Chocolate, a hit in America, to play among a nation of confectionery lovers.

Symbolic of the return of the printed word is the collaboration between John Lewis and Waterstones. A first step is to return the High Street bookseller to a revitalized Oxford Street, where vinyl specialist HMV is another returner.

The rise of Amazon, as a place to buy physical and digital books at discounted prices, seemed to have marked the end of physical book chains.

The only survivors were the best small independents, offering specialist or local services on the more modern High Street.

Chains like Books, etc., B Dalton in the United States and others disappeared.

In Britain, Waterstones, after changing hands several times, survived. Across the Atlantic, Barnes & Noble – with its sprawling flagship store in New York’s Union Square – held firm.

Entering the scene from the left is Paul Singer and his activist investment firm Elliott Advisors. The investment group is best known for its aggressive interventions. He gained fame for his heroic bet on Argentine bonds, when they were thought to be worthless. Since then it has been involved in countless governance battles. Here in the UK he was instrumental in forcing change at the underperforming Alliance Trust. He fostered the reshuffle of pharmaceutical pioneer GSK. A stake has been acquired in Scottish Mortgage Investment Trust. And in the United States, Elliott seeks to overthrow the board of directors of South-West Airlines.

When it comes to reading, a different approach is taken. In 2018, Elliott snapped up Waterstones and bought it for an undisclosed sum from Russian lawyer and billionaire Alexander Mamut. He acquired a recovering company, which had survived the Amazon attack and prospered under the direction of independent book specialist James Daunt.

Singer and his team were making a big bet on ‘peak Amazon’: the idea that with more than 50 percent share of the print market (much more if you include digital publications), saturation had been reached. The opportunity was reopening for elegantly presented High Street shops and shopping centres, offering add-ons such as greetings cards.

In 2019, Elliott followed the success of Waterstones by buying Barnes & Noble, then listed in New York, for £525m after the group’s share value plunged by £800m. The next destination seemed to be administration.

Daunt, a former City figure who started with a magnificent bookstore on Marylebone High Street in central London, was elevated to transatlantic book baron.

Barnes & Noble is in expansion mode. In the summer he bought Colorado-based book chain Tattered Cover from Chapter 11 for £763,000.

By Elliott’s standards, seven years of ownership of Waterstones and now Barnes & Noble represents longevity. There have been suggestions that the property appeals to Singer, who has a taste for old books. However, Elliott has most likely seen an opportunity for a resurgence of the printed word on Kindle (too much time spent on screens) and is fattening the sale of Waterstones/Barnes & Noble.

As a brick-and-mortar company, with a British chief executive in Daunt, there is a real chance of listing on the London Stock Exchange, with a market value of up to £5bn. The timing is dark and, like many things in Britain, Elliott Advisers could be waiting for Rachel Reeves’ first budget and stability. There seems to be no rush.

A global book retailer, with a large presence in the United States, would be a big win for the city.