The hedge fund which took Game Digital onto the stock market four years ago is in talks about a takeover of Waterstones, Britain’s best-known specialist bookseller.
Sky News has learnt that Elliott Advisors, which has backed a string of UK retail deals, is one of a small number of bidders to have lodged formal offers for the chain.
A source said that Elliott had been granted a short period of exclusivity within which to conclude negotiations about a deal.
If the talks do result in a transaction, it would see Waterstones changing ownership for the first time since 2011, when the Russian billionaire Alexander Mamut snapped it up from the ailing entertainment retailer HMV Group.
The price tag being discussed was unclear on Monday, although one insider suggested it was likely to be much lower than the £250m that a newspaper report said Mr Mamut was seeking last autumn.
Mr Mamut has been seeking to raise cash following a crisis at Otkritie, a Russian bank where he is among the biggest shareholders.
Elliott Advisors is part of a bigger investment management empire which is best known for taking aggressive activist positions in a string of major public companies.
It remains a shareholder in Game Digital, alongside the Sports Direct tycoon Mike Ashley.
The intentions of Waterstones chief executive, James Daunt, after a sale of the bookseller are unclear.
Mr Daunt, who founded the smaller chain Daunt Books, is credited with salvaging a future for Waterstones after a period when a turnaround in its fortunes looked to be a remote prospect.
Waterstones trades from approximately 275 shops across the UK, and has seen its financial performance improve after abandoning the pile-it-high approach of less specialist rivals such as WHSmith – which also used to own the chain.
In the year to 30 April 2016, the company made a £9.8m pre-tax profit, reversing a loss the previous year.
Sources said that a number of other potential private equity buyers were waiting to pounce on Waterstones if the talks with Elliott are unsuccessful.
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The sale process is being run by bankers at Rothschild.
An Elliott spokeswoman declined to comment.
Source: Sky