Barnes & Noble says investor’s plan to take the idea private not ‘bona fide’

Barnes & Noble said on Thursday a deal proposed by an activist investor to take the bookstore chain private was not “bona fide” as its chairman in addition to founder, Leonard Riggio, might not participate in addition to raising the required funds was highly unlikely.

Sandell Asset Management had proposed to take Barnes & Noble private with the help of current shareholders in addition to $500 million in debt financing in a deal in which valued the company at more than $650 million, or over $9 per share, The Wall Street Journal reported earlier, citing people familiar with the matter.

Barnes & Noble’s shares closed up about 8 percent at $7.13. They hit a session-high of $7.80 after the WSJ report, valuing the company at $566.5 million.

The Journal said the proposal by Sandell, which holds a 2.75 percent stake in Barnes & Noble, also called for roughly $250 million coming by company shareholders keeping their stakes in addition to rolling them into a brand-new private entity the idea might control.

“The company does not take Sandell’s proposal as bona fide in in which Sandell is usually the beneficial owner of 1 million common Barnes & Noble shares worth approximately $7 million, Mr. Riggio has no intention of rolling his shares into such a transaction, in addition to the company believes a debt financing of $500 million is usually highly unlikely,” Barnes & Noble said.

Sandell did not immediately respond to requests seeking comment.

Riggio holds a roughly 18 percent stake in Barnes & Noble, doing him the brand-new York-based retailer’s biggest shareholder, according to Thomson Reuters data.

The Journal said Riggio’s refusal to roll his stake into a private entity as per Sandell’s plan meant the hedge fund might need to find backing by some other major shareholders or put up the cash itself.

Barnes & Noble is usually grappling using a slump in revenue due to changing reading tastes in addition to competition by online sellers, especially Amazon.com. Its stock had lost nearly 40 percent of its value in which year before the gains on Thursday.

ConsumerEdge Research analyst David Schick said private equity could make sense for the company as the idea “has the potential to change its strategy as a private company — work on membership, NOOK, store structure, in addition to traffic drivers.”

Sandell had in July urged Barnes & Noble to sell itself, saying the retailer could fetch at least $12 per share in addition to attract media or internet companies seeking a retail presence.

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