Barnes & Noble acquired for $638 million

Woman drawing large yellow fish eating smaller fish acquisitions concept

The deal worth an estimated $683 million including the assumption of Barnes & Noble debt comes after years of efforts by the USA book chain to compete against Amazon and the move to online commerce. As of past year, Amazon - which started as strictly an online bookseller - accounts for almost half of all new book sales.

Barnes & Noble stock was at $6.70 a share as of 12:57 a.m. EDT on June 7, 2019. Royce & Associates LP owned 0.17% of Barnes & Noble worth $663,000 as of its most recent filing with the SEC.

"We are pleased to have reached this agreement with Elliott, the owner of Waterstones, a bookseller I have admired over the years", Leonard Riggio, the founder of Barnes & Noble's modern iteration and still its chairman, said in a statement released Friday.

By 1993, Barnes & Noble was a publicly traded company that was upending the publishing industry.

While Daunt will lead both companies, the two booksellers would still operate independently. BlackRock Inc. lifted its holdings in shares of Barnes & Noble by 15.6% during the 1st quarter.

Barnes & Noble runs 627 stores in the United States. The stock rose another 10% in premarket trading Friday.

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Paul Singer's Elliott has made a bundle investing in bankrupt companies, usually by buying convertible bonds.

Barnes & Noble still has more than 600 stores across the US, which threw off almost $200 million of cash last quarter, hence the interest from a financial buyer like Elliott.

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. Its $113 million of net debt, with a maturity date of 2023, is also manageable. Waterstones has successfully restored itself to sales growth and sustainable profitability, based on a strategy of investment in their store estate and the empowerment of local bookselling teams, the company stated.

As for Barnes & Noble, there are probably benefits to managing its challenges away from the public eye.

"In chain bookselling, you need to try and get the best store for each location", Daunt told The Associated Press. But the deal also signals that a relatively cheap bid was more attractive than trying to regain the confidence of public market investors. She previously wrote an M&A column for Bloomberg News.

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