Bankrupt bookstore chain Borders Group now has two companies bidding for it. Phoenix-based private equity firm Najafi Companies is now competing against the Los Angeles-based Gores Group to buy about half of Borders’ remaining stores, the WSJ reports. Like The Gores Group, Najafi specializes in distressed companies.
The WSJ’s source says that both Najafi and Gores are focused on the 265 remaining Borders superstores, and both are seeking to buy Borders’ website and customer lists. The same source said that Gores would shift Borders toward an online retail model, while details of Najafi’s strategy for the company remain unclear.
The source said that Borders hopes to select one of the private equity firms to make a starting bid soon. The WSJ previously reported that the Gores Group deal would be worth about $200 million, but did not mention the size of a possible bid by Najafi.
Najafi was founded by Jahm Najafi in 2002. In 2008, it bought Direct Brands, a direct marketing music, DVD and book club company with brands including BMG, Columbia House DVD, and several book clubs including Book of the Month Club and Doubleday Book Club, and other book clubs. Najafi’s website notes that it “funds investments with internally generated capital, not through a fund,” which would allow it to buy Borders stores quickly.
Borders filed for bankruptcy in February. Last week, it was granted four more months to submit a turnaround plan. At the same hearing, Borders attorney Andrew K. Glenn of Kasowitz Benson Torres & Friedman said that “multiple parties” were interested in buying most or all of Borders’ remaining stores and that he hoped to conclude the sales process within two to four weeks. Glenn also intimated that someone on Borders’ creditors committee, which includes major book publishers, had leaked the news about The Gores Group to the Wall Street Journal (NSDQ: NWS), which a creditors committee attorney denied.