Overseas investment decision for case 200810011 - Borders Group Inc

The application has been approved as it met the criteria.

The Overseas Investment Office is satisfied that the individuals with control of the Applicant collectively have business experience and acumen relevant to the overseas investment, and that the Applicant has demonstrated financial commitment towards the overseas investment. The Overseas Investment Office is further satisfied that each individual that exercises control over the Applicant is of good character and is not an individual of the kind referred to in section 7(1) of the Immigration Act 1987.

Background to the Investment:
The Borders Group, Inc and certain of its subsidiaries (together the Borders Group) intend to enter into an agreement to sell all of the issued shares in Borders Australia Pty Limited and Borders New Zealand Limited (Borders New Zealand) to Spine Newco Pty Limited and Spine Newco (NZ) Limited (Spine Newco). Borders New Zealand operates four bookstores in New Zealand.

Outline of the Investment:
As part of the consideration for the proposed transaction, Borders Group and Borders Pty Limited (Borders Singapore) will be issued a convertible note by A&R Whitcoulls Group Holdings Pty Limited (ARW) which will convert after approximately 60 days into 40 percent of the issued capital, on a fully diluted basis, in ARW. At the time of conversion, Spine Newco will have become wholly-owned subsidiaries of ARW. ARW operates Whitcoulls and Angus & Robertson bookstores, Calendar Club speciality calendar stores and the Supanews news agencies in Australia. The proposed transaction will not result in a divestment by ARW of its existing business but rather a merger of the existing Borders and ARW's businesses.

Rationale for the Investment:
The rationale for the proposed transaction is to increase ARW's operational and infrastructural synergies particularly those relating to the use of information technology services and delivery systems, enabling the merged firm to better compete with established chain stores, and discount and department stores in the supply of books and other leisure, entertainment and stationery products to consumers.