Published: Sun, June 09, 2019
Markets | By Otis Pena

Hedge fund buys struggling book retailer Barnes & Noble

Hedge fund buys struggling book retailer Barnes & Noble

Elliott Advisors has also previously purchased Waterstones, U.K's largest book chain, back in June 2018. The deal values Barnes & Noble at $6.50 a share, a 43 percent premium to the retailer's 10-day volume weighted average closing share price before news of an imminent deal leaked Thursday. The company's founder Leonard Riggio and his family hold 19% of the shares, and have agreed to support the transaction.

Barnes & Noble is the largest brick-and-mortar bookseller in the United States with 627 stores but Amazon controls as much as half all book sales.

Once the deal is finalized, Waterstones CEO James Daunt will take over the CEO role of Barnes & Noble, according to a press release.

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The sources have noted that these discussions are ongoing and the Barnes & Noble could still choose not to pursue a sale. 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. Riggio grew the business, adding several retail stores across the country and transforming the Fifth Avenue store in NY into the world's largest bookstore. As of a year ago, Amazon - which started as strictly an online bookseller - accounts for almost half of all new book sales.

"Physical bookstores the world over face fearsome challenges from online and digital", Mr Daunt said.

The parties expect the deal - subject to shareholder and regulatory approval - to close in the third quarter. "We meet these with investment and with all the more confidence for being able to draw on the unrivaled bookselling skills of these two great companies", Daunt said in a statement.

Barnes & Noble's reported sales growth of 1.1% for the holiday quarter ended January 26 (in stores that had been open at least a year.) That was the company's best quarterly sales growth in several years.

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