Coverage: Barnes & Noble rises 20% as company considers sale
Shares of Barnes & Noble jumped more than 20 percent on Wednesday after it said it is naming a special committee to review bids for the company.
Lauren Hirsch and Lauren Thomas of CNBC.com had the news:
The retailer said in a statement it has received “expressions of interest” from “multiple parties,” including its Chairman Leonard Riggio, who founded the company in 1965.
Riggio “has committed to support and vote his shares in favor of any transaction recommended by the special committee,” Barnes & Noble said.
The bookseller’s shares shares have fallen 18 percent since January, having struggled to adjust to the current retail environment. In July, it fired CEO Demos Parneros for violating company policies. A group of leaders including CFO Allen Lindstrom and Chief Merchandising Officer Tim Mantel have been leading the company in the interim.
Today, Barnes & Noble faces heightened competition from the likes of Amazon Books and other retailers moving their book assortments online. Heading into the key holiday season, the company is struggling to grow sales against a backdrop of strong consumer confidence in the U.S. that’s boosted many retailers of late.
Cathy Bussewitz of the AP reported that Riggio owns 19 percent of the company:
“Consumers want unique experiences and escapes — we think they are finding that in independent bookstores,” said David Schick, managing partner at Consumer Edge Research. “Consumers want to feel a connection to their stores. We do believe Barnes & Noble can make some enhancements that could matter, but it will take time and investment.”
According to FactSet, Riggio owns 19 percent of the company and is its largest shareholder. He said he will vote in favor of any transaction recommended by the committee.
Riggio served as CEO from when Barnes & Noble was founded in 1986 through 2002 and then again from late 2016 through April 2017.
Whoever buys the company will have to find a way to bring something more to the table besides selling books, which are often available cheaper elsewhere, Johnson said.
Nathaniel Meyersohn of CNNMoney.com reported that the company has adopted a poison pill to avoid a hostile takeover:
Barnes & Noble also disclosed that a shareholder it could not identify had rapidly built up a stake in the company. To block a hostile takeover, Barnes & Noble’s board of directors approved what’s known as a poison pill.
The poison pill will kick in if the unidentified party accumulates 20% of the stock or more. At that point, shareholders will be allowed to buy Barnes & Noble’s stock at a 50% discount, diluting the value of the shares.
The announcement comes shortly after another investor disclosed a stake of close to 7%, and said he had held talks with Riggio about buying the company.
The board said Riggio would vote his shares in favor of any transaction recommended by the committee.
A potential sale is just the latest twist in the saga of Barnes & Noble, which is looking to replace its fifth chief executive in as many years.