Barnes & Noble Up on Talks of G Asset Stake - Analyst Blog


Bookstore giant, Barnes & Noble, Inc. ( BKS ) saw its shares rise 5% after private investment firm, G Asset Management, reportedly offered to buy a majority stake in the company.

As per media reports, G Asset has offered to buy 51% stake in Barnes & Noble for $22 per share, a 31% premium on Thursday's closing price. The current offer is an increase from the company's Nov 2013 bid of $20 per share. Alternatively, G Asset has offered to buy an equal stake in Barnes & Noble's struggling digital reading business, NOOK, for $5 per share.

Other than NOOK, the company operates through the Retail segment (which consists of Barnes & Noble bookstores and e-Commerce website, and College Booksellers segment (consists of bookstores in colleges and universities across the U.S.). Both these businesses are more profitable than NOOK.

Per media reports, G Asset has been pushing Barnes & Noble for quite some time to separate the unprofitable NOOK division from its bookstore and digital businesses. According to G Asset, separating the two businesses would unlock substantial shareholder value.

NOOK division handles Barnes & Nobles' digital business including digital content, devices and accessories. It was developed to expand the company's digital business and better compete with behemoths like Amazon Inc. ( AMZN ) and Apple Inc. ( AAPL ).

NOOK has been in the doldrums for quite some time. The company reported a massive fall of over 60.5% in revenues generated from the division during the holiday season (nine weeks ended Dec 28, 2013). Management blamed the lack of new products and severe competition as the primary reasons. Earlier too, the company had reported a 32.2% year-over-year revenue decline in the division in second-quarter fiscal 2014 (ended Oct 26, 2013).

Barnes & Noble carries a Zacks Rank #3 (Hold). A better-ranked stock in the retail sector is Kingfisher plc ( KGFHY ) carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , AMZN , BKS , KGFHY

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