Mamut in talks over £43m bid for Waterstone's chain

Struggling retailer HMV Group announced last night that it was in advanced discussions regarding the sale of its book chain Waterstone's.

The group issued a statement after the close of the London stock market following speculation that Alexander Mamut, a Russian billionaire, had offered 43 million for the bookseller, but added that there was no certainty a deal would be made. Shares had earlier risen by as much as 12.5 per cent.

HMV is understood to be looking to offload the book store business as a condition of negotiations with its lenders, which put back financial tests from the end of April to the beginning of July as the company continued to struggle.

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The group - which owns 731 HMV, Waterstone's and Fopp stores - has issued three profit warnings so far this year.

Mamut, who was an adviser to the former Russian government of Boris Yeltsin, is already a 6 per cent shareholder in HMV Group. A 43m offer is higher than previous speculation he would offer 35m for the chain, which has 298 stores, but is less than analyst hopes of 75m.

HMV Group, which is closing 60 stores over the next 12 months and shedding jobs, aims to cut costs by a further 10m a year. It has faced increasing competition from online retailers and supermarkets in its core CD and DVD markets.