Barnes & Noble stock soars 20% as it explores a sale

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The truth about the retail apocalypse

Barnes & Noble inventory jumped greater than 20% after the board mentioned it will contemplate a sale of the troubled firm.

The board mentioned Wednesday it had appointed a particular committee to evaluation provides. One got here from longtime Barnes & Noble chairman Len Riggio. He’s the corporate’s largest shareholder, controlling near 20%.

Barnes & Noble (BKS) additionally disclosed shareholder it couldn’t determine had quickly constructed up a stake within the firm. To dam a hostile takeover, Barnes & Noble’s board of administrators permitted what’s often known as a poison capsule.

The poison capsule will kick in if the unidentified celebration accumulates 20% of the inventory or extra. At that time, shareholders will probably be allowed to purchase Barnes & Noble’s inventory at a 50% low cost, diluting the worth of the shares.

The announcement comes shortly after one other investor disclosed a stake of near 7%, and mentioned he had held talks with Riggio about shopping for the corporate.

The board mentioned Riggio would vote his shares in favor of any transaction really helpful by the committee.

A possible sale is simply the most recent twist within the saga of Barnes & Noble, which is seeking to exchange its fifth chief govt in as a few years.

The bookstore fired its most up-to-date CEO, Demos Parneros, in early July, citing unspecified violations of firm coverage. Barnes & Noble later revealed that claims of sexual harassment and bullying led to Parneros’ termination.

In August, Parneros sued his former employer in federal court docket for defamation and for firing him with out trigger.

Barnes & Noble nonetheless has extra 600 shops and 23,000 workers. Final quarter, same-store gross sales dropped 6.1% in contrast with a yr in the past.

Gross sales have fallen at Barnes & Noble throughout every of the previous 4 years. New ways, reminiscent of smaller retailer codecs and a kitchen idea, have struggled to win again buyers.

Neil Saunders, managing director of GlobalData Retail, mentioned in September that many of the shops “really feel drained, are too giant and too cluttered, and don’t provide the buyer any compelling cause to go to and purchase.”

He believes Barnes & Noble will shutter extra shops: “Barnes & Noble must slim down to be able to survive.”

Barnes & Noble’s issues come as native and unbiased bookstores are resurgent.

The American Booksellers Affiliation, a commerce group, reported that the variety of unbiased places rose 6% final yr to 2,470.

CNNMoney (New York) First printed October three, 2018: 5:38 PM ET

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