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Non-Tech : Barnes & Noble (BKS)

BKS 6.490

0.0%

Aug 19 5:00 PM EST

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To: Tom Hua who wrote (560)	4/2/1999 1:54:00 PM
From: Glenn Petersen	Read Replies (1) of 1691

The Ingram acquisition definitely gives them a competitive advantage over AMZN on the supply side. Time out for some math and rambling thoughts. While the barnesandnoble.com (BOOK) deal has not yet been priced, the S-1 talks about raising $200.0 MM. Assume that the $200.0 MM buys 15% of the company. That places a $1,333.0 MM value on the company, of which 50% ($666.7 MM) is applicable to BKS. That works out to $9.71 per BKS share. Obviously, BOOK is not going to trade at the offering price. Assume that it is assigned a value equal to 10% of AMZN. That works out to 2.7235 MM, of which 43.5%, or $17.26 per share, is applicable to BKS. Discount that by 40% to $10.35 per share. At a current price of $33 per share, that means that the "bricks and mortar" are being valued at $1.554 MM. The current market cap of Borders (BGP) is $1.079 MM. Note that while the BKS "bricks and mortar" are substantially larger, BGP is more profitable. I'm still on the fence.

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