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Elliott Advisors Buy Barnes & Noble

 

In a seismic shift for the book trade, Elliott Advisors (UK) Limited have entered into a definitive agreement to acquire Barnes & Noble in an all-cash transaction valued at approximately $683m (£537m), including the assumption of debt.

James Daunt, chief executive of Waterstones, will assume also the role of c.e.o. of Barnes & Noble following the completion of the transaction. Elliott will own both Barnes & Noble and Waterstones, with each bookseller to operate independently.

 

 

James Daunt in the past eight years turned around the moribund Waterstones and Elliott Management has faith that he can do the same with Barnes &Noble.

“There is an inherent logic to it. Waterstones had faced the same trials and tribulations, and although the retail climate is different in the US, we operate in broadly similar ways. There is also an element of self-interest; it really matters to us that Barnes & Noble can continue to do what it does, and it really matters that publishers can continue to sell print books through these stores, as well as, obviously, through Amazon.”

Though there are concerns about Daunt dividing his time between the United States and England.

The Bookseller talks to James Daunt about his new adventure.

 

 

Coleman-Lochner, Deveau, and Townsend at Bloomberg on Thursday wrote, “Despite the relentless competition from Amazon, Barnes & Noble has managed to somewhat stabilize its business over the past few years, with revenue declines narrowing to a drop of 3.1% last year. The retailer still generates cash—sales were almost $3.6 billion last year—and the little outstanding debt on its balance sheet isn’t due until 2023. The company has also spent the past few years closing weak stores or moving them to better locations.”

And some in the publishing community are advising each other to look at Sheelah Kolhatkar’s article for The New Yorker from August about the chief of Elliott Management. In “Paul Singer, Doomsday Investor,” Kolhatkar depicts Singer as having a “unique, and immensely profitable, brand of adversarial investing.”

Singer, Kolhatkar writes, is an “activist investor,” a term used for someone who buys stock in a company “to make changes to its business, with the goal of improving the stock price.”

Publishing Perspectives has more on background.

 

 

Once the towering Goliath of the bookselling world, these days Barnes & Noble is getting dwarfed by primarily online competitors — particularly Amazon, which reportedly sells nearly 50 percent of all new books. The bricks-and-mortar giant, on the other hand, has seen its revenue slide each year for the past several years.

There is hope, however.

Daunt has been credited with helping turn the fortunes of Waterstones, which less than a decade ago was “losing horrendous amounts of money,” in the words of its CEO. Lately, the British bookseller has been reporting leaps in profits. The financial backing of Elliott, which says it currently manages approximately $34 billion in assets, shouldn’t hurt Barnes & Noble either.

The NPR article notes the possibilities of the future.

 

Certainly the new set-up could use the help of publishers, but what and how much assistance can they give Barnes & Noble without angering the Amazon elephant?

 

 

 

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