CANONGATE Books, the Booker Prize-winning publisher, has lost its managing director to London rival Granta.
David Graham, the financial brains behind the independent Scottish publishing house, leaves to join Sigrid Rausing, heiress to the 5bn Tetra Pak fortune, who bought Granta Publications and Portobello Books last autumn.
The move will be a major blow to Canongate's owner Jamie Byng, who has relied on Graham, known within the industry as "a number-cruncher with literary savvy", to run the distribution and operational side of the business.
He will not be replacing Graham, choosing to rely instead on the advice of his chairman, Sir Christopher Bland, and non-executive director, Charles McVeigh.
The departure also breaks up one of Scotland's most successful publishing double acts.
In the past six years, Graham and Byng have grown the small Edinburgh-based house into an internationally recognised business, winning one of the literary world's most prestigious awards, the Booker Prize, in 2002.
Graham said he was very sad to leave Canongate but was looking forward to taking up his post as managing director of Granta Publications and Portobello Books, where he hopes to oversee an "aggressive period of growth" for the firm.
He said: "I have had enormous fun helping build one of the leading independent publishers but Granta is a fantastic name, part of the literary establishment in Britain and has a new owner who is committed to reinvigorating and developing the business in lots of exciting directions that I ultimately found irresistible.
"At Canongate there was an enormous amount of entrepreneurial flair and editorial energy which wasn't being translated down to the bottom line.
"There is always a tinge of sadness when you a leave a company that you have really enjoyed working at, but I knew this made sense for me in my career."
Byng will now move to re-organise the business that has enjoyed rapid growth in the past decade.
As well as discovering Yann Martel, author of Life of Pi, which won the Booker, other successes for the formerly low-key Edinburgh company include The Cutting Room by Louise Welsh and Timoleon Vieta Come Home by Dan Rhodes.
But sources say the publishing house has been eclipsed in recent months by Edinburgh rivals Polygon, which has grown substantially on the back of the phenomenal success of Alexander McCall Smith.
Last night Byng said the firm was in as good a shape as it has ever been, with 2006 on course to be a record year.
He said: "I'm very sad about it because David and I have been partners for what has been an extraordinary six years. But there will be opportunities that come out of David's going.
"When I look at what we are publishing this year and next, David leaves Canongate in the healthiest position it has been in and we are on course to have our biggest year ever in 2006 with sales of 7m."
Byng has also signed up McCall Smith to write a book in Canongate's myth series, which Byng claims surpassed his own expectations.