Borders starts Paperchase for £50m retailer

Paperchase, the stationery retailer owned by US books giant Borders, has been put up for sale with a price tag of around £50 million.

Bankers at JPMorgan have been appointed to find a buyer, with HMV and WH Smith among those likely to take a close look. Any deal will be of particular interest to entrepreneur Luke Johnson, the buyout expert who owns Borders UK.

Paperchase made a profit of £4.3 million in the year to February 2007 on sales of more than £47 million.

The stationer has more than 100 stores and concessions, including ones in House of Fraser and Selfridges department stores.

Paperchase has changed hands several times. It was sold by private-equity group Graphite Capital to Borders in 2004. Graphite bought the company when it backed a management buyout from WH Smith in 1996.

It expanded into the US in 2005, opening concessions in Borders stores.

The sale comes at a torrid time in the retail sector. The stock market-listed High Street firms have issued a string of profit warnings since Christmas in one of the toughest environments for decades.

Analysts say private-equity houses could be ready to start snapping up struggling firms on the cheap.