Scholastic Corp. has entered into a partnership with British book direct sellers, The Book People, to strengthen its position in the United Kingdom market.
The Book People, with estimated 2002 revenues of $113 million, sells books through multiple channels, including direct mail to 2 million customers. It also holds display fairs in a variety of venues, such as offices, factories, hospitals and schools. The company also sells and fulfills books for the Times of London, The Daily Mail and other newspapers.
As part of the deal, Scholastic has acquired an 15% equity interest in The Book People for $18 million and will make available an interest-bearing revolving credit facility of up to $4.5 million to finance the continuing growth of The Book People, including the building of a new warehouse in Wales.
Scholastic will also participate in a 50/50 joint venture in direct-to-home bookselling in the U.K. The companies will explore potential opportunities in the U.S. and around the world.
The U.K. venture will be run jointly with The Book People management to revitalize the Red House brand and will market and distribute books for children and adults throughout the U.K under the “Red House” and “School Link” names.
Red House sells children’s books through catalogs mailed to parents at home. School Link sells adult and children’s books to families through schools. The Book People will provide Red House access to its 2 million customers, while Scholastic will provide School Link access to its customers in 25,000 schools. The joint venture is expected to generate revenues of approximately $12 million to $15 million in its first year of operation.
The Book People will continue to be directed by its chairman, Ted Smart, and its CEO, Seni Glaister.
Scholastic named Ian Ronald, 36, as managing director of Scholastic U.K., effective Aug. 12. Ronald, currently CEO of the Wine Society, will succeed David Kewley. The Wine Society, is a direct mail and online wine retailer with 200 employees.
“The U.K. is a strategically important market for Scholastic, and we are taking a range of actions to strengthen our position in book publishing and distribution,” Richard Robinson, CEO of Scholastic, said in a statement. “While we continue to concentrate on publishing and selling books and educational materials for children and schools, the association with The Book People will enable us to expand in the children’s market while adding capability in focused distribution of books for families.”
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