Barnes & Noble: Publishing's Northwest Passage - Bertelsmann

by Geoff Gannon

A reader sent me this email:

I am also a BKS shareholder and have enjoyed…your coverage of the proxy battle. There is quite a lot of speculation right now about takeover possibilities. There is the Reuters report that said: "If Burkle doesn't win at Tuesday's shareholder meeting, sources tied to this bitter, high-profile battle say he is likely to come back with a bid for the ailing store chain." Also according to William Lynch, there is quite a lot of interest for the company right now. Do you have any thoughts on…how this may play itself out?

The New York Post sums it up well:

…while about 20 potential bidders have requested informational books on B&N, sources said the auction appears to be generating tepid interest.

The 20 potential bidders are just agreeing to hear Lazard pitch Barnes & Noble (BKS).

Lynch said “companies” in the interview, even though the Bloomberg reporter asked if there were interested “parties”. Lynch looked uncomfortable. So his odd word choice was probably just that. On the other hand: newspapers reported there are interested strategic buyers.

The obvious strategic buyer is Bertelsmann. They own Random House. They have deep pockets. And they would get more out of the Barnes & Noble name, website, and Nook than private equity.

Private equity is just valuing the stores. A strategic buyer would value Barnes & Noble as a Northwest Passage. Long-term: Barnes & Noble is the only online way around Amazon.

Talk to Geoff about Barnes & Noble (BKS)