The part I didn't like was this excerpt from the news release:
The principal owner of Babbage's Etc. LLC is Leonard Riggio, chairman and chief executive officer of Barnes & Noble, Inc. Accordingly, the Board of Directors of Barnes & Noble, Inc. established a special committee of independent directors to consider the feasibility of the acquisition of Babbage's Etc., to evaluate the fairness ofv the transaction to Barnes & Noble, to make a recommendation to the Board based upon its conclusions, and to review and assist in negotiating the transaction and the purchase price.
Seems like a sweetheart deal to bail out Riggio, but lest I seem too cynical below are two analysts comments, each the opposite of the other:
Barnes & Noble Inc. (BKS) 23 1/16 -3 7/16: --UPDATE-- Deutsche Banc Alex. Brown raises their estimate for FY99 from $1.19 to $1.29 as they like the acquisition of Babbage's Etc. (in contrast to JP Morgan, see below) as they feel it will provide BKS with needed growth in core reatil business.....
Barnes & Noble Inc. (BKS) 26 1/2: --UPDATE-- JP Morgan downgrades
book retailer from "long-term buy" to "market perform" after the company announced the acquisition of Babbage's Etc., operators of video game and entertainment software stores, for $189 mln cash plus the assumption of $26mln in debt, for a deal value of approximately $215 mln; JP Morgan does not like the deal, says it reveals a lack of solid investment opportunities.....
Time will tell but for today we know who the market listened to. |
