In breaking news on Thursday, the Wall Street Journal announced that a hedge fund called Elliott Management Corp is the winner of an auction to acquire the bookseller chain Barnes & Noble. (Earlier this year, in April, Elliott Management also bought a controlling interest in Waterstones, which is a 281-store chain based in the UK.)
News later confirmed that the purchase price will be $683 million for their 600+ locations. This includes assuming their $200-million debt. In addition, James Daunt, founder of Daunt Books and CEO of Waterstones, will take over management of Barnes & Noble.
In a letter to the company chairman and founder Len Riggio wrote:
The transaction will take several months to be completed since it requires a shareholder vote, and regulatory approval. During that time, our management team will work with James so that he can hit the ground running. They will also continue working on the many strategic initiatives, which are already underway.
As it happens, I know James Daunt fairly well, and I am delighted to have him as our new leader. He is a bookseller through and through, and I expect he will make a big difference in our fortunes. Like me, James believes our culture has to be more store-centric, which means more localization of assortments and operations. It follows that he believes local managers must have more authority to get the job done.
This should be good news for the long-term health of B&N. They have long been mired in keeping afloat amidst many changes in management and getting rid of bad leases. The industry has been hoping for something to keep them from following the demise of Borders, Crown Books, Book World, Family Christian, Cokesbury, and the recent announcement of the closing of Lifeway’s physical stores.
Of course we will look back at this post in five years and either be right or wrong. I prefer to think that a hedge fund isn’t going to spend that much money unless they think they will receive a return on their investment. It may mean the closure of unprofitable locations and cutting out unneeded middle management. There may also be efficiencies found between the Waterstones and B&N operations.
