Booktopia acquired by consumer electronics entrepreneur Shant Kradjian

Booktopia entered voluntary administration last month following a lengthy suspension from trading on the ASX, with its woes stemming from a combination of hefty costs associated with a fulfilment centre upgrade, declining sales during the transition, and macroeconomic headwinds.

The business had been struggling to secure both working capital and the funds required for redundancy payments to around 50 staff, which it had announced as part of a cost-cutting drive.

Business News Australia has sought clarification from administrators as to whether the redundancy payments would be covered under the arrangement with Kradjian.

The Booktopia sale was completed on the evening of Friday, 16 August, with the business and assets purchased by Booktopia Direct (IP) Pty Ltd and Booktopia Direct Pty Ltd, which are entities affiliated with Shant Kradjian.

Kradjian founded digiDirect in 2006 at the age of 19, and has grown that business to now sell tens of thousands of products both online and via its seven physical stores, with 150 staff employed. 

In addition to keeping current Booktopia staff, administrators add that Kradjian now intends to hire a further 100. He is encouraging former employees to apply to re-join the brand they helped build.

He describes the latest acquisition, which also includes the Angus & Robertson and Co-Op Bookshop brands as well as $14 million in inventory, as the perfect fit in his portfolio.

"DigiDirect sells a broad range of consumer goods, and expanding into new retail verticals where we can leverage that experience is something I’ve wanted to do," Kradjian says.

"Booktopia is an iconic consumer brand and is also an imperative part of the Australian book industry – it’s Australia’s home of books. I’m excited about this acquisition and glad it could be kept in Australian hands."

Kradjian says that since the Booktopia acquisition the primary focus has been on customers and staff, but his team is also looking at rebuilding the role that Booktopia has in the publishing industry, returning it to its "past glories before growing from there".

"Booktopia is also a wholesale distributor for publishers, exclusively stocking and moving titles from many authors. This is a business that benefits both publishers and Booktopia, and maintaining and building that business is a high priority for us," says Kradjian, who plans to immediately invest millions into rejuvenating the company’s inventory.

"Booktopia’s Sydney customer fulfilment centre is a fully automated facility that’s run by robotics and state-of-the-art auto-packing machines, which executed over 1.8 million orders in the twelve months leading to the administration.

"The Booktopia infrastructure and systems are very good, and we believe that with some investment and the right team and strategy, we’re well-placed for growth."

McGrathNicol partners Keith Crawford, Matthew Caddy and Damien Pasfield say the transaction enables the immediate resumption of trading for the Booktopia business, with the purchasers confirming their intention to hire over 100 employees, with former Booktopia staff encouraged to rejoin the group.

"We are incredibly pleased to have completed the sale of the Booktopia business to the owner of digiDirect," says Crawford.

"The transaction will result in the retention of all remaining employees, the recruitment of some 100 additional employees and continuity of supply for Booktopia’s trade creditors. The purchaser is also offering special arrangements to customers with unredeemed gift cards."

Crawford describes Booktopia as a key part of Australia’s publishing industry for 20 years, so transitioning the business to such a well-known Australian retailer is a "great outcome for all stakeholders".

"We commend digiDirect’s owner Shant Kradjian and his team, who moved quickly and professionally to complete due diligence and the transaction in collaboration with the administrators and Booktopia’s staff and key suppliers," Crawford says.

"We extend our thanks also to key stakeholders who supported the completion of the transaction, including Booktopia staff, Moneytech and our legal advisors Arnold Bloch Leibler."

The sale was managed by McGrathNicol’s deals team and made possible with the support of Booktopia’s secured creditor, Moneytech, which provided essential funding to the administrators to preserve the business pending the sale.

Administrators note the sale price will not be sufficient to provide for a return to shareholders. Having completed the transaction, the administrators will now prepare to convene the second meeting of the creditors of Booktopia.