US book retailer Borders is set to dispose of UK stationer Paperchase, having agreed a deal which will see it being bought by private equity firm Primary Capital for £20 million.
The management buyout deal is expected to be finalised within a week. A portion of the funds generated in the sale will be used to lessen Borders' debts.
Borders bought a controlling stake in Paperchase in 2004, and will continue selling Paperchase products in its stores after the sale.
Paperchase has 106 shops in Britain, including some concessions in department stores such as House of Fraser and Waterstones. Primary Capital envisages growth through new outlets, more domestic and international concessions, as well as expansion into unbroken markets.
The deal represents "another major step in strengthening our balance sheet", said Borders president Mike Edwards. The rise of online, low price booksellers such as Amazon has become a serious threat to Borders, which has also been hit by consumer caution in the recession.
Borders sold its UK chain in 2007, which then fell into administration in November 2009.
