June 11, 2019

Elliott Advisors Buys Barnes & Noble for $683M

The hedge fund is acquiring the bookstore for $476 million plus assuming its debt.

NEW YORK CITY—Elliott Advisors (UK) is acquiring Barnes & Noble, paying $476 million in an all-cash transaction. The sale is valued at $683 million as it includes the assumption of the company’s debt. On Friday, the deal valued Barnes & Noble’s stock at $6.50 per share, a premium of approximately 42% over the retailer’s stock price on Wednesday, before rumors of the deal reported in the media caused the price to jump on Thursday.

In June 2018, the investment company had acquired Waterstones which is the largest bookseller in the UK with 293 bookstores including those in Ireland, the Netherlands and Belgium. In FY 2018, Waterstones had sales of £402 million.

Barnes & Noble is the largest bookstore in the US with 627 shops across all 50 states. In FY 2018, it had sales of approximately $3.7 billion.

Elliott will own both Barnes & Noble and Waterstones, with each bookseller operating independently. James Daunt, CEO of Waterstones, will also assume the role of CEO of Barnes & Noble. Waterstones notes it has thrived over the last seven years following a consistent strategy of investing in its bookshops and relying on local bookselling teams.

“Physical bookstores the world over face fearsome challenges from online and digital, a complex array of difficulties that for ease and some evident reason we lay at the door of Amazon,” says Daunt. “Our purpose is to create, by investment and old-fashioned bookselling skill, bookshops good enough to be a pleasure in their own right and to have no equal as a place in which to choose a book. We counter thereby Amazon’s siren call and defend the continued existence of real bookshops.”

Paul Best, portfolio manager and head of European private equity at Elliott, adds, “Our investment in Barnes & Noble, following our investment last year in Waterstones, demonstrates our conviction that readers continue to value the experience of a great bookstore.”

Barnes & Noble’s board had unanimously approved the deal. Leonard Riggio, founder and chairman of Barnes & Noble, who had led the company for 54 years, says his company was pleased to have reached the agreement with Elliott. “In view of the success they have had in the bookselling marketplace, I believe they are uniquely suited to improve and grow our company for many years ahead,” he says. Promising to assist in a smooth transition, Riggio adds, “I am also confident that James Daunt has the leadership ability and experience necessary to lead this great organization.”

The New York Times had reported in recent years Barnes & Noble has been struggling with increasing foot traffic and sales and in making a profit. The newspaper noted the book retailer closed more than 150 stores in the last decade.