As the retail apocalypse continues to wreck brick and mortar retail franchises across the country, one company has found a potential way out of this proverbial darkness.
Barnes & Noble shot up by almost 30% when news broke that the company is getting acquired by Elliott Management in a deal that would take the bookstore chain private.
Elliott Management is buying Barnes & Noble after the bookstore chain suffered from years falling stock prices. According to some sources close to the matter, the deal is expected to come through relatively soon as Elliott is expected to pay around $6.50 per share for the company, a hefty premium from the $4.6 the company was trading at before today’s spike.
Nor is this the first major bookstore that the hedge fund invested in. Last year, the company bought U.K. book chain Waterstones in a transaction worth around $280 million. It’s expected that should the deal be finalized that Elliott will keep the two bookstore chains separate. Either way, the deal remains the best hope for the ailing bookstore, as otherwise it’s expected that share prices will continue to fall.
“Elliott will get a hell of a deal if it gets Barnes & Noble. There are a ton of expenses that can be ripped out of the business,” commented Rich Schottenfeld, head of a fund that held a 6 percent stake in the Barnes & Nobles back on March 31st. He added that many of the company’s stores were “significantly undervalued when compared to recent transactions in the coffee space.”
Other major retail brands have been struggling as well. Gamestop (NYSE: GME) plunged by as much as 30 percent recently, while Bed Bath & Beyond (NASDAQ: BBBY) has tumbled 40 percent over the course of the past couple of months.
Shares of Barnes & Noble shot up 29.85 percent over the course of the day, increasing by an extra 0.35 during after-hours trading. Over the past few years, the company’s stock price has steadily fallen from around $15 back in 2015 to less than a third of that in 2019. A major blunder for the bookstore chain was it’s massive, billion-dollar investment into its own e-book reader, Nook.
A massive amount of money for a company that’s currently worth less than $500 million, many analysts think that should that money have been used elsewhere, the company and it’s shares would be in a much better position than it is today. Regardless, few other retail brands have as much hope of finding a buyout deal as Barnes & Nobles.
Barnes & Noble Company Profile
Barnes & Noble Inc is a United States-based company that is mainly engaged in retail of books and products of content, digital media, and educational products. The company operates in a multichannel model, including a physical bookstore network throughout the country, an e-commerce platform on BN.com, and its Nook digital business.
The company offers books, magazines, music, DVDs, newspapers, and entertainment content, along with e-reading products under the Nook brand. Retail sales from physical stores and BN.com account for the majority of the company’s total revenue. – Warrior Trading News