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Activist Investor William Ackman Offers to Finance Borders Bid for Barnes & Noble

Monday, 06 Dec 2010 09:19 AM

Activist investor William Ackman on Monday offered to finance a $16 per share Borders-led takeover bid for rival bookseller Barnes & Noble Inc.

Ackman and his Pershing Square Capital Management in a regulatory filing that they would be willing to fund an offer of $16 per share in cash for Barnes & Noble.

With about 60.2 million shares outstanding, that would value Barnes & Noble at about $963.2 million.

That is nearly 21 percent more than Barnes & Noble's closing price Friday of $13.38 a share. Barnes & Noble shares rose $2.31, or 17.4 percent, to $15.59 in pre-market trading.

In the filing, Ackman disclosed a 37 percent stake in Borders, up from 31.5 percent in May.

As an alternative to the $16 per share cash offer for Barnes & Noble, Ackman said in the filing he would finance a combined stock and cash offer.

Ackman is known for getting involved in the operations of companies he holds stakes in. He has successfully agitated for changes at McDonald's Corp., Wendy's International Inc. and Target Corp.

Borders could not immediately be reached. Barnes & Noble had no comment.

Barnes & Noble put itself up for sale earlier this year during a dispute with activist investor billionaire Ron Burkle, who wished to increase his 19 percent stake in the company. In response, the company implemented a poison pill plan limiting single investors to a 20 percent stake. Burkle subsequently waged and lost a proxy battle to gain seats on the bookseller's board.

Barnes & Noble said late last month it still is meeting with "both strategic and financial institutions" but that review might not result in a sale or any other deal.

In late November the company reported a second-quarter loss resulting from steep costs to develop its Nook e-reader and weak physical book sales. Barnes & Noble, based in New York, is investing heavily in its e-readers, including the new Nookcolor, an associated book store and content such as children's books as it tries to retool itself for the future.

Borders, meanwhile, has made a variety of moves to shore up its struggling business, including selling its Paperchase stationery unit and introducing an electronic bookstore, since financier Bennett LeBow invested $25 million in the company in May and became Border's largest shareholder and CEO.

The company, based in Ann Arbor, Mich., reported a slightly larger loss in its second quarter and said it will sell more items besides books as it readies for the crucial holiday season.

Borders is set to report third-quarter results on Thursday.

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Activist investor William Ackman on Monday offered to finance a $16 per share Borders-led takeover bid for rival bookseller Barnes Noble Inc.Ackman and his Pershing Square Capital Management in a regulatory filing that they would be willing to fund an offer of $16 per...
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2010-19-06
Monday, 06 Dec 2010 09:19 AM
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