Hedge Fund Deal to Buy Barnes & Noble to Go Forward as No New Bids Announced

The deal for hedge fund Elliott Management Corp. to acquire Barnes & Noble will proceed, as no new offers were put forth before the agreement deadline for rival bids; the bookstore chain announced on June 7 that Elliott had agreed to buy the chain for $6.50 a share ($475 million in cash).

The Wall Sreet Journal reported on June 10 that book distributor Readerlink was planning to present a rival bid to acquire the nation’s largest bookstore chain which would have beaten out Elliott; however the agreement’s deadline of midnight on Thursday, June 13, for a third party to come in with a new bid passed without a new offer.

Elliott Management bought U.K. bookstore chain Waterstones in 2018 for approximately $279 million, and the agreement with B&N specifies that Waterstones CEO James Daunt will serve as chief executive of both Waterstones and B&N once the deal is finalized. Daunt told The Bookseller on June 14 that “no bid was entered” before the midnight deadline, but added that Readerlink, which distributes books to non-book retailers like Target, Walmart, and drugstore and grocery chains, could still make an offer; a Barnes & Noble spokesperson confirmed this information.

Barnes & Noble’s agreement with Elliott, according to a securities filing, specified that if the bookstore chain had managed to make a deal with a third party before midnight on June 13, Elliott would have been legally entitled to a fee of up to $4 million. However, if Readerlink were to come in with a counter-offer at this point, acceptance by B&N would trigger the payment to Elliott to increase to $17.5 million.

The deal with Elliott is expected to close in the third quarter of the fiscal year, and according to a June 7 report from the Wall Street Journal, is worth $683 million including the assumption of B&N’s debt. But according to The Bookseller, Schottenfeld Management Corp, a group led by Barnes & Noble investor Richard Schottenfeld, stated in a June 13 public filing with the Securities and Exchange Commission, that the Elliott deal undervalues the company and fails to maximize value for shareholders, and suggested that the B&N’s special committee re-evaluate all offers.

The auction process for Barnes & Noble first got under way in October 2018 after the chain announced that multiple parties had expressed interest in acquiring the company. Since then, potential buyers revealed have included B&N executive chairman Len Riggio, who owns 19.2 percent of the company, and Readerlink.