The deal is done. After a nearly seven-month saga that began with Indigo's hostile attempt to buy Chapters, Canada's Competition Tribunal has finally approved the Chapters-Indigo merger—a move insiders hope will help stabilize Canada's publishing industry. The merger, worth C$122 million (US$80 million) will create one retail behemoth out of this country's two dominant chains.
"We are truly excited by the prospects of this merger," said Heather Reisman, the president and CEO of Chapters, and the former CEO of Indigo. "It makes great sense. It allows us to take advantage of a broader base of expertise, substantial cost savings, synergies and efficiencies, all of which will have a positive impact on our customers, shareholders and suppliers."
The merger has been supported by the Association of Canadian Publishers (ACP), which has been involved in the negotiations between Chapters and the Competition Bureau. "We are delighted that the Competition Tribunal ruled so quickly on this issue," Monique M. Smith, executive director of the ACP, told PW. "We are looking forward to moving into the fall season with the much-needed stability that the Code of Conduct will provide," Smith added, referring to operating agreements that Chapters has agreed to adhere to (News, Apr. 30).
Chapters said in a statement that it believes the merger will increase operating profitability by closing poor performing stores and those within close proximity to each other and by eliminating duplicate overhead expenses. The move may also benefit independent booksellers. Sheryl McKean, executive director of the Canadian Booksellers Association told PW, "It will change the bookselling community in Canada. We still strongly believe that the excess stores need to be closed, not sold, but basically this is an opportunity, because of the Code of Conduct agreement, to see a rebalance, to motivate a healthy, competitive environment. It is also the best chance we have had in a long time." She added that it's up to bookstores (other than Chapters) to take advantage of the opportunity.
