Tuesday, November 8, 2011

Indigo to sell Kobo for US$315 million

A sea change in strategy for Indigo Books and Music with word that it will sell off its Kobo ereader division. The buyer is Tokyo-based Rakuten Inc., a large world-wide e-commerce company which will continue to run Kobo as a stand-alone company with head office in Toronto. The linked top-notch story from Canadian Business contains pretty much all the information you might need to try to guess the why and whatever of this startling decision. Notably, Kobo's minority 49 percent shareholders will also sell. They are the Australian book and music chain RedGroup Retail and Cheung Kong Holdings, an investment company controlled by Hong Kong billionaire Li Ka-shing. Among the factors which may have contributed to this decision is the intense competition coming from Amazon's Kindle and others. Another will be the US$40 million quarterly loss announced by Indigo at the same time as the sale. This loss occurred notwithstanding Kobo's stellar performance increasing its sales some 219 percent during the quarter. One survey of ereaders placed Kobo behind various editions of the Kindle and Novo, as well as the Sony reader. Canadian Business.

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