Thursday, February 28, 2013

Barnes & Noble chairman offers to buy struggling bookseller – can it be saved?

Company's weakening financial situation has made it vulnerable to takeovers as bookseller reckons with faltering ebook venture

Barnes & Noble
CEO Leonard Riggio intends to make an offer for Barnes & Noble Booksellers, and other retail assets. Photograph: Spencer Platt/Getty Images

Barnes & Noble was once the Goliath of the book-selling business. Now, next to Apple and Amazon, its falling sales and plan to close 20 stores a year makes it look more like a struggling David armed only with a slingshot.
Barnes & Noble's weakening financial position makes the company vulnerable to takeover offers, and it received one on Monday. Barnes & Noble said in a regulatory filing that its founder and chairman, Leonard Riggio, proposed buying the company's bookstore business and its domain. Riggio will not make an offer for the Nook e-reader business, according to the company. He already owns 29.8% of the company.

It is not yet known how much Riggio plans to offer, or whether he has arranged the cash and bonds to pay for it. The company indicated in a filing that the deal is subject to negotiation of Riggio's specific financial terms, including terms of whatever financing he can gather.
Riggio could well end up with a bargain. The bookstore business of Barnes & Noble could be worth only about $484.5m, according to estimates by Stifel Nicolaus analyst David Schick based on the company's sales over the past 12 months.
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