Bloomberg News

Advanced Marketing Agrees to Baker & Taylor Purchase

February 12, 2007

Advanced Marketing Services Inc., (MKTS:US) a bankrupt book distributor for warehouse retailers Sam's Club and Costco Wholesale Corp., agreed to sell most of its assets to rival distributor Baker & Taylor Inc.

Terms were not disclosed. The proposed sale doesn't include Advanced Marketing's small-publisher division, which will be sold through a court-sanctioned auction, U.S. Bankruptcy Judge Christopher Sontchi ruled today. Sontchi, in Wilmington, Delaware, must approve both sales, which the company said should close by March 15.

``Baker & Taylor is a recognized leader in the book distribution industry and has the experience to seamlessly assume operations,'' Advanced Marketing Chief Executive Officer Gary Rautenstrauch said in statement.

San Diego-based Advanced Marketing filed for bankruptcy protection Dec. 29, three years after the U.S. Justice Department and the Securities and Exchange Commission began investigating its financial reporting and cooperative advertising practices, according to court papers.

Two Advanced Marketing employees and one officer were sentenced in connection with the Justice Department probe. The company has resolved all of the shareholder suits it had faced.

Creditors Balk

Details of the sale to Baker & Taylor will be filed with the court in Wilmington by Feb. 16, when Advanced Marketing said it would ask Sontchi to approve the rules governing the auction. A separate auction for the company's Publishers Group West Inc. unit will be held Feb. 15.

Spokespersons for Advanced Marketing and Baker & Taylor did not immediately return phone calls seeking comment.

Creditors objected to Advanced Marketing's initial proposal to sell Publishers Group without the traditional bankruptcy auction. They claimed the unit would draw a higher price in an auction than from a proposed sale to Perseus Books LLC, a distributor for independent publishers which has agreed to pay approximately $20 million to creditors.

One creditor offered to pay Publishers Group's debts at 85 cents on the dollar, topping Perseus's bid of 70 cents.

The Feb. 15 auction will pit Perseus against National Book Network, a unit of Lanham, Maryland-based Rowman & Littlefield Publishing Group Inc.

$823 Million

No date has been set for the auction of the rest of the company's assets. In that auction, rivals must bid higher than Charlotte, North Carolina-based Baker & Taylor.

Founded in 1982, Advanced Marketing has two primary businesses. The parent company sells mainstream books from the major publishing houses through warehouse clubs. Publishers Group provides marketing services and sells books put out by smaller publishers, mostly through traditional retail outlets.

Advanced Marketing had $823 million in sales for the 12 months ending March 31, 2005. The company serves 1,078 membership warehouse clubs in the U.S. and employs about 800 people.

Shares of Advanced Marketing fell 2 cents to 24 cents in over-the-counter trading in New York. The shares have fallen 93 percent in the last year.

The case is: In Re: Advanced Marketing Services Inc., 06- 11480, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at

To contact the editor responsible for this story: Patrick Oster at

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