Barnes & Noble (B&N) has entered a formal review process to evaluate strategic alternatives, including a potential sale. The decision follows interest from “multiple parties” to acquire the company, including Chairman and Founder Leonard Riggio, according to a company statement.
The book store retailer also is working to thwart a hostile bid, after an unidentifiable number of parties recently began acquiring company stock. By offering preferred shares at a 50% discount to current shareholders, the company will prevent any party from accumulating 20% or more of common shares.
The B&N Board of Directors has appointed a Special Committee of independent directors, comprised of Mark Carleton, Paul Guenther, Patricia Higgins and Kimberley Van Der Zon, to lead the strategic review process. Riggio, the largest stakeholder with approximately 19% of the company, has committed to support and vote his shares in favor of any transaction recommended by the Special Committee.
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While this is the first time Barnes & Noble has openly considered a sale, an activist investor urged the company to sell last year, even offering to buy the company. Barnes & Noble rejected the offer. In 2013, Riggio expressed interest in buying out the company’s stores and web site to take it private, but a deal was never finalized.
Barnes & Noble continues to operate 629 locations in the U.S. as the last major book store chain holding on despite Amazon’s domination of book sales. While both Borders and B. Dalton shuttered business during the past decade, Barnes & Noble continued to keep most of its stores open — peaking at 726 stores in 2008 — despite continued sales and traffic declines.
The company doesn’t presently have a CEO and won’t seek a replacement until after its October shareholder meeting. The retailer has had a rough time keeping a chief executive in place: five CEOs have led the charge at Barnes & Noble since 2010. The most recent CEO, Demos Parneros, filed a defamation suit against Barnes & Noble in August, one month after being terminated from the position for alleged sexual harassment and other company policy violations.
