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Barnes & Noble acquired for $638 million

The nation’s largest retail bookseller has been acquired by a British hedge fund.

Barnes & Noble has agreed to be acquired by Elliott Advisors UK Ltd. in an all-cash deal valued at about $683 million, including the assumption of debt. The deal follows Elliott’s June 2018 acquisition of Waterstones, the largest retail bookseller in the U.K. James Daunt, CEO of Waterstones, will also assume the role of CEO of the beleaguered Barnes & Noble following the completion of the transaction.

The Barnes & Noble board has unanimously approved the transaction and Leonard Riggio, the company’s outspoken founder and chairman, has entered into a voting agreement in support of the same. The values Barnes & Noble at $6.50 a share, a 43% premium to the chain’s 10-day volume weighted average closing share price prior rumors of the transaction.

“We are pleased to have reached this agreement with Elliott, the owner of Waterstones, a bookseller I have admired over the years,” Riggio stated. “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. I am also confident that James Daunt has the leadership ability and experience necessary to lead this great organization. I will do everything I can to help him make the transition smooth.”

Both chains will operate independently but will share best practices in addition to the same CEO. Daunt is expected to apply many of the same strategies that he used to help turn around Waterstone’s around in recent years to Barnes & Noble, which currently operates 627 stores nationwide. 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.

“Physical bookstores the world over face fearsome challenges from online and digital,” said Daunt. “We meet these with investment and with all the more confidence for being able to draw on the unrivaled bookselling skills of these two great companies. As a place in which to choose a book, and for the sheer pleasure of visiting, we know that a good bookstore has no equal. I thank Mr. Riggio for his confidence, and I am grateful to Elliott for their commitment to support the continued transformation at Waterstones, and now also the same at Barnes & Noble.”

Barnes & Noble has been under ongoing competition not only from Amazon but also, more recently, from independent booksellers. Within the past five years, Barnes & Noble has lost more than $1 billion in market value, according to CNBC. In October 2018, Barnes & Noble said it was evaluating strategic alternatives following expressions of interest from multiple parties to acquire the company — including one from Riggio.

The transaction is subject to customary closing conditions, including the receipt of regulatory and stockholder approval, and is expected to close in the third quarter of 2019.
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