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Kobo on the Borders Collapse: We’re Not Borders!

Kobo have posted a couple official responses to the recent Borders announcement. The first was an email sent around last night, and the second was a press release put out this afternoon. They said basically the same thing, so let me quote last night’s email:

“As one of the early investors in Kobo, Borders has a minority stake in our company and serves as part of our distribution in the U.S. along with Walmart, Best Buy, Sears and other leading retailers. As a member of the broader book publishing and retailing community, we are watching Borders' story and will offer our support to Borders and their employees.”

For some time, Kobo and Borders have been in the process of transitioning Borders' customers' eBook accounts to Kobo, in order to provide such customers direct access to the most up-to-date eReading functionality, apps and devices. All Borders customers that have transitioned to Kobo shall enjoy uninterrupted access to their e-Reading accounts. We shall continue to work with Borders to transition customer accounts to Kobo."

In the past few Borders admitted that they don’t have a buyer who would pay enough to satisfy the lenders.This put them in the position of having to announce that all 399 remaing Borders, WaldenBooks, and borders Exrpess stores will be closed. All 11 thousand employees will be fired. (I for one was hoping the senior management would be fired out of a cannon, but alas I don’t think they can afford the expense.)

I wish i could crow about being right on this point, but surely it was obviously going to happen. Borders survival was at best a long shot. They had a declining market, high debt, and not very friendly creditors.

It’s not clear yet who will end up with Border’s share in Kobo. That was an ~11% ~25% stake, and it should fetch at least some money. That’s not much compared to the bottomless pit that is Borders, though.

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Tyler July 19, 2011 um 10:35 pm

They made huge mistakes in the past few years especially in the e reader selection. The Micro Cruz line and the first Kobo especially, had to cost them so much. Plus their employees were so badly informed. Barnes and Noble employees are like hawks when they spot a customer looking at the Nook.

Nate Hoffelder July 19, 2011 um 10:56 pm

I’m not so sure. My local Borders had some pretty good people working with the ebook readers.

Tyler July 20, 2011 um 1:52 pm

Go to Fairfax and talk to those guys.

FJames July 20, 2011 um 10:12 am

Actually Kobo’s press release said that Borders holds an 11% share (not 25%). Chapters-Indigo, the largest Canadian bookstore chain, holds 51%, with smaller stakes held by some bookstore chains from other countries and some private investment firms.

Nate Hoffelder July 20, 2011 um 10:19 am

Really? I have older sources that say 25%. Thanks for catching that.

I bet the difference is because of the recent round of financing. Borders' share shrank because the new investors also got a chunk of the Kobo.

Alexander Inglis July 20, 2011 um 10:35 am

Typically, there is a clause with founding shareholders that the other founding shareholders can have right of first refusal should one of them wish to sell. It might generate a few bucks for the Borders creditors selling the Kobo shares back to Kobo.

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