Bill Ackman Tells Borders (BGP) To Bid $16 A Share For Barnes & Noble (BKS)

12/2/2014 GuruFocus News, Stock Research and Commentaries -- GuruFocus.com

http://www.gurufocus.com/page_print.php?e=content1 1/4

Bill Ackman Tells Borders (BGP) To Bid $16A Share For Barnes & Noble (BKS)December 06, 2010 | About: BKS -5.01% BGP +0%

Both the New York Times and Wall Street Journal are reporting that BillAckman is backing a $16 a share bid for Barnes & Noble (BKS). Thebidder would be Borders (BGP). The financier would be Ackman.

Ackman owns a large stake in Borders. Borders is the second largestprint book seller in the United States behind Barnes & Noble. Thecombined company would be by far the biggest bookseller in the UnitedStates.

Bill Ackman runs a hedge fund called Pershing Square.

As far as I can tell and this may change as the story develops noneof the news reports include any information not found in the report Pershing Square made tothe SEC. In other words, the reporters just found the filing and are regurgitating it. This willprobably change as they call people for comments.

For now all we have to go on is Bill Ackmans 13D.

So here it is I have replaced the legalese Reporting Persons with Pershing Square andIssuer with Borders so you can read the damn thing:

(Pershing Square has) informed (Borders) that they would be prepared to finance, onmutually acceptable terms, an offer by (Borders) to purchase all of the equity securities ofBarnes & Noble, Inc. (BKS) in an all-cash transaction valued at $16 per share. In thealternative, (Pershing Square has) informed (Borders) that they would be prepared to finance,on mutually acceptable terms, an offer for mixed stock and cash consideration, to the extentBKS stockholders prefer to share in the substantial synergies of the business combination andreceive equity in the combined company.

Geoff GannonArticles

414 followersFollow



No assurance can be given that (Pershing Square) will reach an agreement with (Borders) onthe terms of a financing. Furthermore, the terms of the transaction (Pershing Square is)prepared to finance may change. (Pershing Square reserves) the right to terminatediscussions with (Borders) at any time for any or no reason.

Im a Barnes & Noble shareholder.

If youve been following my Barnes & Noble articles you know I bought shares around$15.36 a share initially, and have since bought a smidge more at lower prices. Overall though my cost is around $15. So thats a pretty paltry 6% return if you followed me into thestock. No reason to celebrate yet.

Barnes & Noble is tenuously controlled by Len Riggio. Riggio founded the modern dayBarnes & Noble. The name comes from elsewhere. Dont ask. Its not important.

Barnes & Noble is in the middle of auctioning itself off. At least thats the official line. Butrecent reports in the New York Post suggested that process was close to dead. The Post saidneither Chairman Len Riggio nor activist investor Ron Burkle want to buy all of Barnes &Noble. Each man controls about a third of the company.

Burkle only owns 20%. Theres a poison pill blocking him from buying more. Burkle has orhad an ally in another hedge fund. And a Burkle backed slate of board candidates lost toRiggio in a closely contested election back in September.

What will Borders say to Ackman? What will Riggio say? What will Burkle say? And can eitherBorder or Barnes & Noble speak with one voice?

The answer to the first 3 questions is we dont yet know. The answer to the last one isdefinitely not. These are 2 companies with big shareholders who wont always agree amongthemselves or with outside investors.

And what will this do to Barnes & Nobles review of strategic alternatives?

Does this mean Barnes & Noble is in play?

If so that changes the Riggio control dynamic. If Borders bids that changes the equation forRiggio, Burkle, and the Barnes & Noble board. Both financially and legally.



Kidchoi - 3 years ago

Comments

So what now?

Well see. More on this story as it develops.

In the meantime you might want to read my own Barnes & Noble analysis. Like I said Ivegot skin in the game. Im definitely biased. Conflicts of interest abound, etc., etc.

I spread the analysis out over a few articles:

Why Would Anyone Buy Barnes & Noble (BKS) Stock at $16 a Share?

Who is Ron Burkle? Why Does He Want Control of Barnes & Noble (BKS)? And How DoesHe Know Charlie Munger?

Who Will Win the Barnes & Noble (BKS) Proxy Fight? Ron Burkle? Or Len Riggio?

What Does Ron Burkle See in Barnes & Noble (BKS)?

Would Benjamin Graham Buy Barnes & Noble (BKS) Stock at $15 a Share? And How WouldHe Analyze the Stock?

About the author:

Geoff GannonGeoff Gannon

Rating: 2.6/5 (7votes)

Bill Ackman Tells Borders (BGP) To Bid $16 A Share For Barnes & Noble (BKS)

Documents

Transcript of Bill Ackman Tells Borders (BGP) To Bid $16 A Share For Barnes & Noble (BKS)