A new chapter begins for book retailer

With Amazon.com’s share price approaching $500 on the heels of a highly publicized 20th anniversary promotional event, the struggling Books-A-Million chain announced a deal to go private for a paltry sum.

The Books-A-Million chain was always a distant competitor to the likes of Barnes & Noble and even the now defunct Borders chain. Then along came Amazon.com and Books-A-Million grew more irrelevant. As its sales and profits declined so did its growth prospects in the eyes of investors and its stock price.

On Jan. 29, 2015, after shares closed near an all-time low of $1.68, Executive Chairman Clyde Anderson and members of his family stepped up with an offer to buy the retailer for $2.75 a share. The Anderson family already owned 57.5% of the company’s outstanding shares.

A special committee comprised of two independent members of the company’s five member board of directors was created to evaluate the offer and other potential alternatives. The review resulted in a sweetened offer agreed to on July 14 that involves the Anderson family paying $3.25 a share, or roughly $21 million, for the shares of the company they don’t already own.

While the $3.25 a share price doesn’t seem like much, especially compared to Amazon.com’s share price of nearly $470, the Anderson’s pointed out the price they agreed to pay represents a substantial premium on a percentage basis from when their offer was first made to acquire the company in late January. At that time, the Anderson’s proposal to pay $2.75 a share was a premium of 64% above the Jan. 29 closing price of $1.68. The $3.25 per share price represents a 93% premium.

“We believe the transaction is a positive result for everyone, most importantly the company’s shareholders. The special committee and its advisors have done a thorough job to assure that all terms and conditions are arms’ length, and we are pleased to have come to a fair and balanced agreement,” said Clyde Anderson.

The company eked out a $2.9 million profit on sales of $474 million last year after losing $8.2 million of sales of $470 million the prior year. At the end of its most recent fiscal year, Books-A-Million operated 256 superstores and smaller format mall-based stores in 33 states, with 138 of those locations concentrated in seven southeastern states including Florida, Alabama, Georgia, Tennessee, Virginia, North Carolina and South Carolina.