U.K. Investment Group Acquires Barnes & Noble for $683 Million

Elliott Advisors is confident that 'a good bookstore has no equal'

The U.S. bookseller will become a portfolio company alongside U.K. bookseller Waterstones.
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It’s a new—wait for it—chapter for bookseller Barnes & Noble, which will be acquired by U.K. investment firm Elliott Advisors in an all-cash deal worth $683 million.

Barnes & Noble joins a portfolio that also includes U.K. bookseller Waterstones, which Elliott acquired in June 2018. The brands will operate independently, but Waterstones CEO James Daunt will take over as CEO of Barnes & Noble as well, and a release noted the booksellers will “benefit from the sharing of best practice.”

Elliott paid $6.50 per share, which is a 43% premium over the 10-day average closing price. The transaction is expected to close in the third quarter.

Elliott declined to comment beyond the release, but a rep noted appeal in the firm’s success with Waterstones, as well as Barnes & Noble’s stock price, which made it a comparatively cheap retail deal, and the firm is now looking to make the bookseller profitable again—and then profit itself.

The Waterstones strategy included investing in store real estate and the “empowerment of local bookselling teams.” And, the release said, “this commitment to bookselling excellence will strengthen the ability of both companies to navigate with success a rapidly changing retail landscape.”

In a statement, Daunt was confident bookstores retain an advantage over the Internet despite the price, selection and convenience trumpeted by a competitor.

“We meet these [‘fearsome challenges’] with investment and with all the more confidence for being able to draw on the unrivaled bookselling skills of these two great companies,” he said. “As a place in which to choose a book, and for the sheer pleasure of visiting, we know that a good bookstore has no equal.”

Paul Best, portfolio manager and head of European private equity at Elliott, also said the investment reflects the firm’s confidence “readers continue to value the experience of a great bookstore.”

Elliott says it plans to “pursue growth strategy” as it builds upon Barnes & Noble’s foundation in the U.S. and “[address] the significant challenges facing the brick-and-mortar book retail space, applying a model that successfully turned around Waterstones over the past decade.”

Founder and Chairman Leonard Riggio, who started with a college bookstore in 1965 and has been with the company ever since, said he’s confident Elliott is “uniquely suited to improve and grow our company for many years ahead.”

A generation ago, Barnes and Noble stores were “the information piazzas of America,” which “[combined] a vast and deep selection of book titles with an experienced bookselling staff and a warm, comfortable and spacious atmosphere.”

Ironically, perhaps, it squashed independent bookstores en route to a high of 726 locations in 2008 until it, in turn, was squashed by Amazon.

It still has about 600 locations and has more recently experimented with a new store concept “where books remain the hero [with] an expanded food and beverage offering, including wine and beer and a major commitment to hospitality featuring table-side service.”

Barnes and Noble did not respond to a request for comment by deadline.

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