Elliott Management activists announced Friday that they plan to acquire Barnes & Noble bookstore for around $ 683 million, including debt.
Barnes & Noble’s price is $ 6.50 per share. This is equal to a premium of 43% above the 10-day moving average of equity traded before the announcement of the upcoming agreement that ends on Thursday.
News deals sent shares more than 10% higher on Friday to the highest level of $ 6.70 per share. He finished the day at 11% to $ 6.62. Part of investor enthusiasm may be due to data retention provisions that allow sellers to find cheaper deals without penalties before the end of June 13.
However, analysts said they considered Elliot’s bid for Barnes & Noble fair and they would not expect a higher bid.
Barnes & Noble is under constant pressure from Amazon and independent bookstores. Its shares fell around 25 percent before the news ended. Over the past five years, Barnes & Noble has lost more than $ 1 billion in market value.
Amazon holds nearly half of its revenues with new books, the Codex Group reported last year with a public survey report. Walmart has a market share of around 4.2%.
Seeking a change of direction, Barnes & Noble said last year that he was investigating sales after “interested in” several parties, including its chairman Leonard Rijso, who founded the company in 1965.
Riggio agreed to a voting agreement to support the contract, the company said.
As a private company, Barnes & Noble is likely to have more time to make changes and investments that might not be practical given public attention. Part of the bookstore reversal plan is the closing of several of the more than 600 US stores and moving to smaller spaces that have a fresh and modern look. The company claims that prototype stores encourage buyers to buy books online or through tablets.
Retailers show little signs of recovery. In March, it was announced that during the holidays, sales at locations that had been opened for at least one year had increased by 1.1% in the quarter – the best quarterly performance in three years. In January, the company had $ 15 million in cash and cash equivalents.
Founded and led by billionaire Paul Singer, the company acquired Waterstones, the largest British bookstore, last year. The ownership of both booksellers can provide Eliot with synergy and influence with publishers, industry experts said.
Elliott will operate two retailers on its own, the company announced on Friday, although Waterstones CEO James Down will lead two businesses as CEOs.
The merger is expected to be completed in the third quarter, the company said. Elliott and Barnes & Noble hope the agreement will be changed to use a bid structure, which is likely to shorten the closing time in a few weeks.
Barnes & Noble will also pay quarterly dividends of 15 cents per share, paid on August 2.
In the merger document, Elliot said he had funded a $ 700 million loan agreement with Wells Fargo, the National Association and Bank of America. by Wells Fargo Bank, National Association, Global Carlyle Credit Management and Pathlight Capital Funds.