A possible takeover of Barnes & Noble by Borders:
Ackman Offers to Finance a Borders Bid for Barnes & Noble
By MICHAEL J. DE LA MERCED
New York Times
December 6, 2010, 6:49 am
The hedge fund managed by William A. Ackman, the Borders Group’s biggest shareholder, has offered to finance a $960 million takeover bid for its larger rival, Barnes & Noble, according to a regulatory filing on Monday.
In the filing, Mr. Ackman’s Pershing Square Capital Management said that it would finance an all-cash bid of $16 a share, a 20 percent premium to Barnes & Noble’s closing stock price on Friday.
Pershing also disclosed that it had raised its stake in Borders to 37.3 percent from 31.5 percent. Recent share purchases vaulted Pershing past Borders’ chairman and chief executive, Bennett LeBow, who owns a 35 percent stake through stock and warrants.
The proposal is the latest effort by Mr. Ackman, to revive Borders, which is struggling to turn itself around after years of declining sales. The hedge fund took a big position in Borders nearly two years ago, providing financing to help bolster the company’s balance sheet and installing one of its executives as chairman.
At the same time, Barnes & Noble is conducting an auction to sell itself, after having fought off the billionaire investor Ronald W. Burkle earlier this year.
The company is now in the second stage of its sales process, with about eight to 10 potential buyers having made initial offers, a person briefed on the matter previously told DealBook. Barnes & Noble executives have been making presentations to these bidders in recent weeks, this person added.
The possibility of a merger between the country’s two biggest booksellers is nothing new: Speculation about a deal arose in 2008, when Borders put itself up for sale. But Borders instead took itself off the auction block and later turned to Pershing for financing.
Mr. Ackman is no stranger to Barnes & Noble either, having held a nearly 12 percent stake in the company until last year.
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