Barnes & Noble sold to hedge fund Elliott Advisors for $683M

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

The Wall Street Journal first reported yesterday that Elliott was the lead bidder in an auction for Barnes & Noble, which has 627 stores across the country, and since then the struggling booksellers stock shot up by almost 60 percent.

Waterstones CEO James Daunt will also take on the role of CEO at Barnes & Noble.

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.

The purchase by the hedge fund comes after Barnes & Noble in October said that it might put itself up for sale after it was approached by a number of potential buyers.

"I look forward greatly to working with the booksellers at Barnes & Noble", Daunt said in a statement. "While this could improve profitability, the competitive landscape as a whole remains tough, so the success of this acquisition will depend on how Elliott can make BKS relevant again so that it can effectively compete with value and online players".

Barnes & Noble finally closing the books on its almost 26 years as a publicly traded company. According to the announcement, "Elliott seeks to build upon this strong foundation as it addresses the significant challenges facing the bricks and mortar book retail space, applying a model that successfully turned around Waterstones over the past decade". Along the way, it's weathered self-inflicted wounds and internal drama.

Including debt, the deal is valued at $683 million, according to the companies. The American chain operates 627 locations.

In 2014, Barnes & Noble closed its New York Fifth Avenue store - once the world's largest bookstore - and has faced declining sales for at least the last three years. The book retailer's business model has been thoroughly upended by e-commerce, its electronic reading gambit failed and sales have been falling for years. It purchased United Kingdom -based book chain Waterstones in 2018 for $279 million. As of 1:03 p.m. PDT, shares were up another 11% today to $6.62.

The deal does include a $30 million breakup fee, providing Riggio or some other suitor an avenue to step in and try to top the offer.

So it may be the end of an era for Barnes & Noble. Independent bookstores have also persisted in the face of digital publishing. "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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