Barnes & Noble sells to hedge fund Elliott for $475.8 million

Darnell Taylor
June 9, 2019

In a statement, the companies said Elliott agreed to pay $6.50 per share in an all-cash transaction, a 43% premium over Barnes & Noble's 10-day weighted average closing share price before news of an imminent deal leaked Thursday.

Barnes & Noble, being the largest bookstore chain in the United States, has had lasting power in an industry where its competitors have fallen to tech giants, namely Amazon.

The bookseller is being bought by Elliott Management's affiliate, Elliott Advisors (UK) Ltd.

Waterstones CEO James Daunt will become the CEO at Barnes & Noble as well.

"We are pleased to have reached this agreement with Elliott, the owner of Waterstones, a bookseller I have admired over the years", Barnes & Noble founder Leonard Riggio said in a statement. To compete with that, Waterstones, which gets less than 5% of its revenue from e-commerce, has taken a different approach. The company has cut into sales of both Barnes & Noble and independent book sellers alike.

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The uphill battle with Amazon has forced Barnes and Noble to go private. The retailer still generates cash - sales were nearly $3.6 billion a year ago - and the little outstanding debt on its balance sheet isn't due until 2023.

According to a Bloomberg news article citing people familiar with the process, Barnes & Noble is nearing a deal to sell itself to Elliott Management, an American investment management firm.

"In chain bookselling, you need to try and get the best store for each location", Daunt told The Associated Press. As for Waterstones, its new sister company, the press release announcing the deal said that the chain "has successfully restored itself to sales growth and sustainable profitability" under CEO James Daunt by investing in the stores and through "empowerment" of local staff. Daunt will now try to adopt similar strategies at the USA business.

The sale, valued at about $683 million including debt, is targeted to close in the third quarter if approved by regulators and shareholders. Over the past five years, Barnes & Noble has lost more than $1 billion in market value. "We meet these with investment and with all the more confidence for being able to draw on the unrivalled bookselling skills of these two great companies".

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