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The Barnes & Noble Board is Up to Something Hinky With the B&N Stock Price

The same board that has been paying dividends despite falling revenues has come up with a plan to do – well, I’m not sure what.

At first glance it looks like the board is trying to prevent a takeover by corporate raiders, but I’m not sure that makes any sense.

The Company further notes that it has observed rapid material accumulations of its stock by a party or parties that cannot be identified. In light of the impending strategic alternatives process and such share accumulations, the Board also announced the adoption of a short-term Shareholder Rights Plan. The adoption of the Rights Plan is intended to maximize the likelihood of a successful outcome for the strategic alternatives process.

Under the terms of the Rights Plan, the rights will expire on October 2, 2019. In the absence of further action by the Board and subject to certain exceptions, the rights will be exercisable if a person or group, without Board approval, acquires 20% or more of Barnes & Noble’s Common Stock or announces a tender offer which results in the ownership of 20% or more of Barnes & Noble’s Common Stock. If the rights become exercisable, all rights holders (other than the person triggering the rights and related parties) will be entitled to acquire preferred shares equivalent to Barnes & Noble’s Common Stock at a 50% discount.

The rights will trade with Barnes & Noble’s Common Stock, unless and until they are separated upon the occurrence of certain future events. Barnes & Noble’s Board may terminate the Rights Plan or redeem the rights prior to the time the rights are triggered. Further details of the Rights Plan will be contained in a Form 8-K to be filed with the Securities and Exchange Commission.

At first glance this looks like the board is maneuvering to protect their cushy jobs by diluting a corporate raider’s stake in the company (they’re getting paid to run the company into the ground, and they don’t want a raider to sell B&N for parts).

Another possibility is that they plan to use this to boost the number of shares they own (it is the same board that authorized dividends during quarters with declining revenues, after all).

All we know at this point is that all the drivel in the media about B&N considering selling itself, or that it has an offer, or other nonsense like that – that is just a smokescreen created by the board as a cover for what is really going on.

If you know the real story, I would love to hear it.

P.S. And if you think the real story is that B&N has serious offers to buy the company then I have a bridge I want to sell you.

image by Elvert Barnes via Flickr


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Disgusting Dude October 4, 2018 um 12:50 am

Remember when Riggio planned to take B&N private?
But couldn’t come up with the cash?
Well, they now have a committee to "evaluate" proposals, which includes one from Riggio. Really, which one will the board pick?

The poison pill is only to keep outsiders away when the holiday numbers come in and the stock drops even more and he buys it even cheaper.

Then the company pulls a "miraculous" turnaround and he makes a mint.
Or, more likely, he sells the pieces for what they’re worth separately, which is more than the whole.

Maybe the company losing 60% of its paper value was on purpose. A tank and raid move.

Steve October 4, 2018 um 1:52 pm

According to NYT:

Barnes & Noble said that it has received “expressions of interest” from multiple potential buyers. One came from Leonard S. Riggio, the company’s chairman, who grew it from a local bookstore into a retail giant, only to see its dominance eroded by Amazon. The company also put in place a shareholder rights plan — otherwise known as a poison pill — to deter unsolicited buyers, after seeing an unexplained run-up in purchases of its shares.

Nate Hoffelder October 4, 2018 um 1:55 pm

That bit about expressions of interest is based on the same press release that I got. It is clickbait BS.

Smart Debut Author October 5, 2018 um 11:43 am

“expressions of interest from multiple serious buyers”?

In plainer English:

Vultures circling.

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