From The Wall Street Journal:
Barnes & Noble Inc. said it is considering a sale of the company after receiving expressions of interest from multiple parties, including from the company’s executive chairman, Leonard Riggio.
The struggling bookseller on Wednesday said it would launch a formal review process to evaluate its strategic options. A special committee of the board will lead the review.
Barnes & Noble also said it has adopted a short-term shareholder rights plan, after observing “rapid material accumulations” of its stock by parties it can’t identify. The rights, which will expire in a year, would go into effect if a person or group acquires 20% or more of Barnes & Noble common shares without the board’s approval.
The plan would allow all rights holders to purchase preferred shares that are equivalent to the retailer’s common stock at a 50% discount. This would dilute the outsider’s holdings.
The company said Mr. Riggio, who has a 19.2% stake, will vote his shares in favor of any transaction recommended by the committee.
. . . .
Years of sliding sales and unsuccessful turnaround efforts have taken a heavy toll on Barnes & Noble. Its market capitalization has been sliced by more than two-thirds since 2015 to about $400 million. And there’s no sign of an end to the bleeding. For the full fiscal year that ended April 28, total sales fell 6% to $3.7 billion.
As its traditional retail business suffers, Barnes & Noble has struggled with its online offerings, where revenue fell 14% in the most recent quarter. On Wednesday, during the retailer’s annual shareholder meeting, Mr. Riggio said improving the company’s website was its top priority.
Link to the rest at The Wall Street Journal
PG says this level of visible turmoil at BN has to be a drop in the bucket compared to the internal turmoil in the organization. Anybody who is not flooding the world with résumés is living in an alternate reality.
As has been widely reported, the company has been operating on a
$75 $750 million line of credit for several months. It’s difficult for PG to believe that whoever extended the line of credit (PG hasn’t seen the identity of the lender anywhere) has not included some substantial covenants and obligations that a floundering company is liable to violate. If the lender has the ability to pull back the line of credit and BN does something (or fails to do something) that triggers such a pullback, the bookseller might close down in a hurry.
Publishers small and large (and their authors) would likely take a substantial financial hit as well. Recall the mess that Borders left when it suddenly closed its doors a few years ago.