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Private Equity Firm Wants to Buy B&N for $22 a Share

Barnes barnes noble logo& Noble has just received a buyout offer from G Asset Management, a little-known private investment firm. This firm is looking to acquire a 51% stake in the bookseller, and they’re willing to put up $672 million, or about $22 a share.

The firm has stated that they plan to spin out the Nook division as a separate venture apart from the retail stores and the college stores. If G Asset Management cannot buy B&N, they made a second offer for the just a controlling interest in Nook Media at $5 a share.

Barnes & Noble stock price jumped at the news, but it is still trading below $18 a share at this time.

If you’ve been following bookselling news for any length of time then G Asset Management is a name you might recognize; they made a similar offer in 2012. At that time they wanted a 51% interest in B&N College, the division that runs college bookstores. That deal fell through, with B&N instead choosing to form Nook Media by combining the Nook unit and B&N College, and selling a chunk to Microsoft and Pearson.

And last November, G Assett Management proposed separating the Nook business in a deal that would have valued the retailer at $20 a share. That deal also fell through.

Len Riggio, chairman of B&N, made his own attempt to take control of B&N and split the company in 2013.  he wanted to take the retail stores private and let the rump of B&N go its own way. He later withdraw his plans after winning some unknown internal power struggle.

B&N has yet to comment on the offer, but they have confirmed that they received it.

IMO, they would be fools not to accept. I think they should have take the earlier offer. This would have set them free from their most toxic asset, the Nook platform, while also giving the retail chain an infusion of much needed capital.

B&N’s revenues have continued to decline over the past few years, with the most recent holiday season showing a 6.6% decline in sales, with the digital sales showing an even steeper decline.

But B&N being B&N, I am also going to put money on their declining to sell the Nook unit. I also don’t think that G Asset Management has much of a chance of gaining a controlling interest in B&N; Len Riggio is the single largest stockholder and at one point last he controlled around 45% of the company. That’s going to make it really easy for him to block this deal.

Update: And it looks like Riggio might not have to offer. According to Bloomberg, GAsset Management only has a few million in assets, not the nearly $700 million it would take to carry out this deal.

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Chris Meadows February 21, 2014 um 7:11 pm

It’s also worth noting that the company making the offer may not have any money to put where its mouth is. Investment documents indicate it raised all of $1.75 million in security sales last year; pretty far short of the nearly $700 million they’d need to close the deal.

Nate Hoffelder February 21, 2014 um 7:19 pm

This might explain why the other offers never went anywhere.

Paul February 21, 2014 um 8:00 pm

They also seem more interested in the real estate part of their business, not the book selling part, so I hope they don’t get it. Look what happened to Sears for example, it’s a shadow of itself since a hedge fund trader grabbed it for debt.

Chris Meadows February 21, 2014 um 8:09 pm

If that’s the case, it’s puzzling they’d want to buy the Nook division by itself at all.

fjtorres February 21, 2014 um 8:16 pm

They may be planning to flip it.

Nate Hoffelder February 21, 2014 um 8:29 pm

That’s what i was thinking, but surely whoever they are going to flip it to could have dealt directly with B&N?

fjtorres February 22, 2014 um 6:20 am

Somebody Riggio would never willingly deal with.
Might be an outfit that approached B&N and was rejected out of hand so they’re trying with a proxy. If he’s playing with somebody else’s money he wouldn’t need much of his own.

anon February 21, 2014 um 8:40 pm

It’s this guy — doesn’t appear to be a serious bid, but the "press release" sure got a lot of news coverage. Also, there was unusually high call option activity in the week before on out-of-the-money options that were about to expire worthless in a week. SEC investigation coming?

anon February 21, 2014 um 9:42 pm

He bought options on 3 million shares for as little as 5 cents each and then issued a press release which resulted in a huge spike in price.

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