Both the New York Times and Wall Street Journal are reporting that Bill Ackman is backing a $16 a share bid for Barnes & Noble (BKS, Financial). The bidder would be Borders (BGP, Financial). The financier would be Ackman.
Ackman owns a large stake in Borders. Borders is the second largest print book seller in the United States behind Barnes & Noble. The combined company would be by far the biggest bookseller in the United States.
Bill Ackman runs a hedge fund called Pershing Square.
As far as I can tell – and this may change as the story develops – none of the news reports include any information not found in the report Pershing Square made to the SEC. In other words, the reporters just found the filing and are regurgitating it. This will probably change as they call people for comments.
For now – all we have to go on is Bill Ackman’s 13D.
So here it is – I have replaced the legalese “Reporting Persons” with “Pershing Square” and “Issuer” with “Borders” so you can read the damn thing:
“(Pershing Square has) informed (Borders) that they would be prepared to finance, on mutually acceptable terms, an offer by (Borders) to purchase all of the equity securities of Barnes & Noble, Inc. (“BKS”) in an all-cash transaction valued at $16 per share. In the alternative, (Pershing Square has) informed (Borders) that they would be prepared to finance, on mutually acceptable terms, an offer for mixed stock and cash consideration, to the extent BKS stockholders prefer to share in the substantial synergies of the business combination and receive equity in the combined company.”
“No assurance can be given that (Pershing Square) will reach an agreement with (Borders) on the terms of a financing. Furthermore, the terms of the transaction (Pershing Square is) prepared to finance may change. (Pershing Square reserves) the right to terminate discussions with (Borders) at any time for any or no reason.”
I’m a Barnes & Noble shareholder.
If you’ve been following my Barnes & Noble articles – you know I bought shares around $15.36 a share initially, and have since bought a smidge more at lower prices. Overall – though – my cost is around $15. So that’s a pretty paltry 6% return if you followed me into the stock. No reason to celebrate – yet.
Barnes & Noble is – tenuously – controlled by Len Riggio. Riggio founded the modern day Barnes & Noble. The name comes from elsewhere. Don’t ask. It’s not important.
Barnes & Noble is in the middle of auctioning itself off. At least that’s the official line. But recent reports in the New York Post suggested that process was close to dead. The Post said neither Chairman Len Riggio nor activist investor Ron Burkle want to buy all of Barnes & Noble. Each man controls about a third of the company.
Burkle only owns 20%. There’s a poison pill blocking him from buying more. Burkle has – or had – an ally in another hedge fund. And a Burkle backed slate of board candidates lost to Riggio in a closely contested election back in September.
What will Borders say to Ackman? What will Riggio say? What will Burkle say? And can either Border or Barnes & Noble speak with one voice?
The answer to the first 3 questions is we don’t yet know. The answer to the last one is definitely not. These are 2 companies with big shareholders who won’t always agree among themselves or with outside investors.
And what will this do to Barnes & Noble’s review of strategic alternatives?
Does this mean Barnes & Noble is in play?
If so – that changes the Riggio control dynamic. If Borders bids that changes the equation for Riggio, Burkle, and the Barnes & Noble board. Both financially and legally.
So what now?
We’ll see. More on this story as it develops.
In the meantime – you might want to read my own Barnes & Noble analysis. Like I said – I’ve got skin in the game. I’m definitely biased. Conflicts of interest abound, etc., etc.
I spread the analysis out over a few articles:
Why Would Anyone Buy Barnes & Noble (BKS) Stock at $16 a Share?
Who is Ron Burkle? Why Does He Want Control of Barnes & Noble (BKS)? And How Does He Know Charlie Munger?
Who Will Win the Barnes & Noble (BKS) Proxy Fight? Ron Burkle? Or Len Riggio?
What Does Ron Burkle See in Barnes & Noble (BKS)?
Would Benjamin Graham Buy Barnes & Noble (BKS) Stock at $15 a Share? And How Would He Analyze the Stock?
Ackman owns a large stake in Borders. Borders is the second largest print book seller in the United States behind Barnes & Noble. The combined company would be by far the biggest bookseller in the United States.
Bill Ackman runs a hedge fund called Pershing Square.
As far as I can tell – and this may change as the story develops – none of the news reports include any information not found in the report Pershing Square made to the SEC. In other words, the reporters just found the filing and are regurgitating it. This will probably change as they call people for comments.
For now – all we have to go on is Bill Ackman’s 13D.
So here it is – I have replaced the legalese “Reporting Persons” with “Pershing Square” and “Issuer” with “Borders” so you can read the damn thing:
“(Pershing Square has) informed (Borders) that they would be prepared to finance, on mutually acceptable terms, an offer by (Borders) to purchase all of the equity securities of Barnes & Noble, Inc. (“BKS”) in an all-cash transaction valued at $16 per share. In the alternative, (Pershing Square has) informed (Borders) that they would be prepared to finance, on mutually acceptable terms, an offer for mixed stock and cash consideration, to the extent BKS stockholders prefer to share in the substantial synergies of the business combination and receive equity in the combined company.”
“No assurance can be given that (Pershing Square) will reach an agreement with (Borders) on the terms of a financing. Furthermore, the terms of the transaction (Pershing Square is) prepared to finance may change. (Pershing Square reserves) the right to terminate discussions with (Borders) at any time for any or no reason.”
I’m a Barnes & Noble shareholder.
If you’ve been following my Barnes & Noble articles – you know I bought shares around $15.36 a share initially, and have since bought a smidge more at lower prices. Overall – though – my cost is around $15. So that’s a pretty paltry 6% return if you followed me into the stock. No reason to celebrate – yet.
Barnes & Noble is – tenuously – controlled by Len Riggio. Riggio founded the modern day Barnes & Noble. The name comes from elsewhere. Don’t ask. It’s not important.
Barnes & Noble is in the middle of auctioning itself off. At least that’s the official line. But recent reports in the New York Post suggested that process was close to dead. The Post said neither Chairman Len Riggio nor activist investor Ron Burkle want to buy all of Barnes & Noble. Each man controls about a third of the company.
Burkle only owns 20%. There’s a poison pill blocking him from buying more. Burkle has – or had – an ally in another hedge fund. And a Burkle backed slate of board candidates lost to Riggio in a closely contested election back in September.
What will Borders say to Ackman? What will Riggio say? What will Burkle say? And can either Border or Barnes & Noble speak with one voice?
The answer to the first 3 questions is we don’t yet know. The answer to the last one is definitely not. These are 2 companies with big shareholders who won’t always agree among themselves or with outside investors.
And what will this do to Barnes & Noble’s review of strategic alternatives?
Does this mean Barnes & Noble is in play?
If so – that changes the Riggio control dynamic. If Borders bids that changes the equation for Riggio, Burkle, and the Barnes & Noble board. Both financially and legally.
So what now?
We’ll see. More on this story as it develops.
In the meantime – you might want to read my own Barnes & Noble analysis. Like I said – I’ve got skin in the game. I’m definitely biased. Conflicts of interest abound, etc., etc.
I spread the analysis out over a few articles:
Why Would Anyone Buy Barnes & Noble (BKS) Stock at $16 a Share?
Who is Ron Burkle? Why Does He Want Control of Barnes & Noble (BKS)? And How Does He Know Charlie Munger?
Who Will Win the Barnes & Noble (BKS) Proxy Fight? Ron Burkle? Or Len Riggio?
What Does Ron Burkle See in Barnes & Noble (BKS)?
Would Benjamin Graham Buy Barnes & Noble (BKS) Stock at $15 a Share? And How Would He Analyze the Stock?
