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Activist investor Elliott buys UK bookshop chain Waterstones

[LONDON] British bookshop chain Waterstones is to be acquired by Elliott Advisers, the US activist hedge fund which has made its presence felt in the UK's corporate world recently by helping force the demerger of Costa Coffee amongst other shake ups.

Waterstones said on Thursday that Elliott would become its new owner, providing all the financing for the transaction, with its previous backer Lynwood Investments retaining a minority stake. The terms of the deal were not disclosed.

The chief executive of Waterstones said the Elliott deal represented a "happy outcome" for the book shop chain.

"We enter new ownership looking forward with great optimism to the next chapter in the development of Waterstones," CEO James Daunt said in a statement.

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Elliott has been very busy in Britain over the course of this year.

Most notably, coffee shop and hotels group Whitbread said on Wednesday that it would spin-off its Costa Coffee business into a separate company just weeks after Elliott became its biggest shareholder.

The investor also pressed British engineering company GKN to engage in takeover talks with suitor Melrose .

In January, Elliott revealed it had bought a 2.8 per cent stake in takeover target Sky, the UK pay TV company, and has 5.1 per cent of British software company Micro Focus , a company struggling after its sales plunged and its CEO left.

Waterstones, which had sales of over £400 million (S$739.7 million) in its last financial year, has returned to profitability over the last two years after almost collapsing in 2011 when it was hit by a combination of high debt and declining book sales in the face of competition from electronic readers.

The deal is expected to be completed in May.