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Aug 1 – Aug 8, 2010 Edition Barnes and Noble Sale Draws Lackluster Interest
NEW YORK, NY/AUTHORLINK NEWS/August 4, 20100–Barnes & Nobles announcement this week that it would put the company up for sale has drawn little attention from potential investors. According to an item in The Wall Street Journal Market Beat, the company has only a 30% chance of finding a buyer.
Barnes & Noble shares were up just shy of 20%, after it put itself up for sale Tuesday. The company made the move under pressure from shareholder activists such as investor Ronald Burkle who has threatened a take-over. Analysts at Goldman, the investment and securities firm, changed BNs stock rating from the sell list to neutral on August 4. The analysts say they are guarded on Barnes & Noble stock due to the high cost of transcending into electronic book sales and the gloomy outlook for bricks and mortar stores.
Leonard Riggio, 69-year-old founder and chairman and Barnes & Noble, is contemplating forming an investor group to buy the company. He owns 29.9% of the company, while Burkle owns 19%.
Goldman assigned the 30% likelihood of a sale based on potential challenges in financing a transaction and the potential lack of other bidders besides Riggio and Burkle.
According to a report by Reuters, Standard & Poors Michael Souers, said: “I don’t think there is going to be whole lot of interest aside from perhaps Burkle or Riggio. It could be the two of them bidding against each other. Riggio is too attached to this business to want to sell out.”
Prospective investors may be concerned about Barnes & Noble’s future prospects. As readers turn to buying electronic books, the companys 720 bookstores have suffered.
With a market value of about $900 million, Barnes & Noble is dwarfed by competition such as Amazon.com Inc (AMZN.O), which has a market value of about $57 billion.
Industry watchers say Barnes & Noble’s brand remains strong and has a place in the bookselling industry among online giants such as Amazon.com and Apple Inc (AAPL.O). But investors are wary of BNs expensive attempt to compete with their Nook e-book reading device against other fast-selling electronic readers.
Burkle has challenged the Riggio family for what he sees as poor corporate governance and currently has a law suit against Barnes & Noble for trying to block Burkles efforts to buy more shares in the company, a move most likely designed to force a complete company take-over.