Barnes & Noble to keep Nook after all
Barnes & Noble has changed its mind about which business to spin off. But in the end, the bookseller will still have to compete with Amazon.
Barnes & Noble now says it is looking to raise as much as $775 million by spinning off its college bookstore business, traditionally the strongest performing division for Barnes & Noble. Last May the company said it would be spinning off its Nook division after disappointing sales.
Regardless of which business it spins off, Barnes & Noble will still have to deal with the one problem that’s been plaguing it for years: competition from Amazon. Barnes & Noble has been squeezed on book and textbook sales by the e-commerce giant for years, with no signs of a let-up coming soon.
“The opportunities and challenges we expect to arise in the immediate future of the Barnes & Noble retail business differ markedly from those of our business,” Barnes & Noble Education said in its S-1 filing with the SEC. “For Barnes & Noble, increasing foot traffic in existing locations, adapting offerings to shifting consumer tastes and patterns and harmonizing the in-store, online and digital experiences will require a fully engaged board of directors and management team that has a different skill set and experience than those required to execute our goals and strategic initiatives. We believe the spin-off will enhance the ability of Barnes & Noble and [us] to focus on [our] respective strategies.”
The separation of Barnes & Noble Education (which comprises the Barnes & Noble college business) from Barnes & Noble’s retail and Nook digital businesses will, when consummated, create two independent, publicly traded companies. Barnes & Noble will offer as many as 775 million shares in the spinoff, which is expected to be completed by the end of August.
“We have a talented college management team in place, led by CEO Max Roberts, and we will continue to invest and innovate to support the mission of our campus partners, expanding to new colleges and universities, students and faculty and increasing our presence in the growing market for digital educational content and services,” said Michael P. Huseby, CEO of Barnes & Noble Inc. Barnes & Noble says the separation will allow each business to optimize its strategic opportunities. As more focused companies with differing potential growth profiles, capital needs and market dynamics, each company will benefit from strategic clarity and separate management and board focus. The separation will also allow investors to assess each business more clearly as a stand-alone company.
“Separating Barnes & Noble Education will create an industry-leading, pure-play public company with more flexibility to pursue strategic opportunities in the growing educational services markets,” Huseby added. “At the same time, Barnes & Noble will be able to better capitalize on improving industry trends and merchandising initiatives within its core retail business. Retail and the Nook digital business will be able to leverage a more integrated technology infrastructure for improved efficiency and to better serve digital customers.”
Barnes & Noble, through its retail business, is the nation’s largest bookseller operating 649 Barnes & Noble stores in 50 states. The college division operates 714 stores.