The music and books retailer HMV today agreed to buy Ottakar's for £62.8m - far below its original offer of £96.4m.

HMV is paying 285p in cash for each share in the struggling independent bookseller. In September, it had agreed to pay 440p.

The two companies said they would face the growing competitive pressure from supermarkets and online retailers better together. However, the literary world has voiced alarm at the disappearance of a high quality independent book chain.

HMV - which owns Waterstone's books - is paying less for Ottakar's because the bookseller's problems have deepened after the original deal was referred to the Competition Commission.

The commission gave the green light to a merger, saying it would not lead to a significant lessening of competition.

"The strategic rationale for the acquisition of Ottakar's is now stronger than ever," Alan Giles, the HMV chief executive, said.

"A combined Waterstone's and Ottakar's business will create an exciting, quality bookseller, able to respond better to the increasingly competitive pressures of the retail market."

Philip Dunne, the Ottakar's chairman, cited increasing competition from supermarkets and retailers on specialist booksellers, particularly those not big enough to compete on equal terms.

However, the commission found that competition from traditional outlets such as WH Smith was just as formidable.

"Against this background, and given the costs and risks associated with implementing the necessary restructuring programme to compete longer term, the board of Ottakar's believes that the offer is fair and reasonable," Mr Dunne said.

HMV has itself attracted takeover interest from the private equity firm Permira as well as from Tim Waterstone, the founder of Waterstone's.

The company said Ottakar's would benefit from the introduction of Waterstone's stock management systems and operating practices, enabling it to stock a "more relevant range" of books.

"Introducing these systems and practices into Ottakar's would lead to cost efficiencies and margin and working capital benefits," an HMV statement said. The combined business will have 336 stores.

Trading conditions at Ottakar's have deteriorated steadily since the second half of last year.

Last week, the company issued a trading update reporting that like-for-like sales, which exclude sales from new stores, were down 8% during the sixteen weeks to May 20.