Ackman Pushes Borders Bid for Barnes & Noble
Usually in business, it’s the bigger company acquiring the
smaller one. But, when you’re a smaller company and you have a major investor
like William Ackman, the normal rules no longer apply as evidenced by
the announcement that Borders is considering a bid for Barnes & Noble.
Ackman’s Pershing Square Capital Management, which holds a 37 percent share
in Borders, has offered to finance a deal to the tune of $963 million to acquire
the chains’ larger rival.
The proposed deal is reminiscent, at least in one respect,
to Edward Lampert’s deal for Kmart to take over Sears. It would have one smaller,
struggling retail chain acquire a larger and also struggling business. The
two traditional bookstore chains face challenges from Amazon.com, Target and
Walmart as well as new competitors in the e-book business, such as Apple and
Mary Davis, a spokesperson for Borders, said in statement that the company
supported Mr. Ackman’s attempt to forge a merger. "We have previously
expressed to Barnes & Noble our interest in such a business combination,
and we look forward to continuing those discussions," she said.
and the market did not seem to be overly excited about the prospects of a Borders/Barnes & Noble
"While we think this is a reasonable offer, we do not anticipate that
Leonard Riggio, [Barnes & Noble’s] founder, chairman and largest shareholder,
will find it sufficient," Michael Souers, an analyst with Standard & Poor’s
Equity Research, told Reuters.
Borders had no comment.
Discussion Question: What do you think of the proposed merger between Borders
and Barnes & Noble? Would the combined companies have a greater chance
against big box and online competitors?
- Investor urges Borders bid for Barnes & Noble – The Associated Press/The
- Ackman would finance Borders bid for Barnes & Noble – Reuters/Yahoo!
- Ackman Offers To Finance Borders Buyout Of Barnes & Noble – Dow Jones