Much of the book publishing community is anxiously awaiting to the see what the final terms of ReaderLink’s acquisition of Baker & Taylor turns out to be.
Earlier this month, the country’s largest distributor to mass merchandisers and other non-bookstore outlets agreed to acquire the country’s largest distributor to libraries. In ReaderLink’s letter to publishers and other partners, company CEO Dennis Abboud noted that under terms of the deal, ReaderLink is buying only B&T’s assets and that all outstanding financial obligations remain with B&T.
That last part has many publishers worried about how much they can expect to be paid by B&T, given the financial troubles laid out in the ReaderLink letter.
“It is concerning that the accounts payable will remain with the current owners,” the head of one independent publisher said, noting that this makes it unclear how publishers will get paid or if they will need to write off the outstanding invoices. Another CEO of an independent publisher told PW that a group of companies are considering filing a class action lawsuit to hold up the deal until there are assurances that publishers will be paid. It is unclear at press time if that suit will become a reality, however, especially considering that the parties have set September 26 as the date for the deal to close.
In his letter, Abboud wrote that he had been advised that someone connected with B&T would be available to provide guidance regarding the process for submitting claims related to pre-closing open invoices. Publishers can now send their information and claims to APClaims@baker-taylor.com, but the process for addressing claims won’t begin until after the sale is completed.
It is rare, but not unheard of, for a company to agree to an acquisition that involves the acquiring company buying just the assets and not taking on the liabilities. More than one source said such a deal suggested B&T was very eager to find a buyer. Another source said such a deal would likely leave creditors—be they publishers, distributors, or freight companies—with no official voice in how B&T’s assets would be distributed. “This could be a wild ride,” one source said. “No one wants to get stiffed.”
The bright side
Concerns over not being paid in full for what suppliers are owed has overshadowed some of the positives of the deal, the most important being that B&T will still exist and benefit from the additional resources of ReaderLink.
Current B&T owner and CEO Aman Kochar wrote about what a combined ReaderLink-B&T will look like in a letter to customers, explaining that ReaderLink has over $250 million in inventory across its six distribution centers, which will augment B&T’s existing operations centers. Kochar will continue to head B&T and most employees will remain with the company.
“By partnering with ReaderLink, your Baker & Taylor team will continue to deliver the exceptional service, inventory, and solutions you expect,” Kochar wrote.
One indie publisher worried over payment did see the upside of the deal, pointing to the fact that B&T will be on more stable financial footing. The publisher was also hopeful that with ReaderLink’s support, B&T will be able to build Baker & Taylor Distribution Services “into a meaningful distributor.”
“Overall, it is a surprise and there are mixed emotions over this development,” this publisher said. “We are here to support the development of the business.”
