After months of uncertainty having struggled with solvency and a $6 million fine from the ACCC, Australia’s largest online book retailer Booktopia (ASX: BKG) has been sold by administrators in a move that will manage the financially distressed company, but see shareholders returned nothing. 

The sale was finalised on Friday, 16 August by administrators from McGrathNicol, marking the end of an era for the once-thriving online business that had survived through a time when other mainstream book retailers like Borders and Angus & Robertson fell by the wayside. .

The new owners, Booktopia Direct (IP) Pty Ltd and Booktopia Direct Pty Ltd, are affiliated with Shant Kradjian, the owner of the Australian consumer electronics retailer DigiDirect.

The buyer: DigiDirect and Shant Kradjian

DigiDirect, an omnichannel retailer with a strong national presence, is known for its extensive range of consumer electronics, including cameras, computers, and related accessories. The Company has built a reputation in the Australian market, thanks to its online platform and well-established physical stores across the country.

Shant Kradjian, the man behind DigiDirect, is recognised for his entrepreneurial acumen and strategic vision. Under his leadership, DigiDirect has expanded significantly, capitalising on the growing demand for consumer electronics and maintaining a strong competitive edge in a crowded market. Kradjian’s move to acquire Booktopia highlights his keen interest in diversifying his business portfolio and venturing into new sectors, particularly the publishing industry.

The Transaction and Its Implications

The sale of Booktopia, managed by McGrathNicol’s Deals team, was necessitated after the company entered voluntary administration due to financial difficulties. Despite the company’s iconic status in Australia’s publishing industry, the deal was finalised at zero dollars, reflecting the severe challenges Booktopia faced. 

Keith Crawford, a Partner at McGrathNicol, expressed satisfaction with the transaction’s outcome, particularly in light of the retention of all remaining employees and the recruitment of over 100 additional staff. The continuation of business operations is seen as a positive step for Booktopia’s trade creditors and the wider publishing community. 

“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,” he said. 

“The Purchaser is also offering special arrangements to customers with unredeemed gift cards.” 

Despite the successful sale, the transaction will not provide any return to shareholders, marking a bitter end for investors who had supported the Company’s growth over the years after Booktopia listed on the ASX in 2020 at an IPO Offer Price of $2.30 per share. 

BKG shares however last closed at $0.045 on 12 June 2024 before McGrathNicol was called in. 

The business never really recovered after being handed a $6 million fine by the ACCC for breaching consumer laws around the refunding of books purchased from Booktopia. 

With the average price of a book on Booktopia being $28.27, 19 books refunded would have cost Booktopia $537.13 in revenue. 

Instead, they were issued a $6 million fine that would be paid off over 5 years that won’t be carried over to the new owners. 

With the completion of the sale, the administrators are now preparing for the second meeting of creditors, where further details regarding the company’s future will be discussed.