The market and media are both continuing to speculate on Bill Ackman's attention-getting theoretical offer finance a purchase of Barnes & Noble and merger with Borders. Barnes & Noble stock jumped sharply in early trading yesterday and gave back some of the gains to finish at $14.69 a share. But they have rallied again today, almost touching the $16 price floated by Ackman about an hour ago. Borders, which is almost a penny stock, rose even more on a percentage basis yesterday on huge volume, but is down for the day today.
As we suggested yesterday, the most likely outcome of Ackman's maneuver is to ignite an actual deal for some kind of investor group--possibly including chairman Len Riggio--to get serious about taking Barnes & Noble private. The WSJ reiterates its November estimate of potential bidders, saying "eight to 10 private-equity firms and strategic companies are also weighing whether to submit second-round bids for the company in the coming weeks." Reportedly, neither Borders nor Ackman have signed the required agreements with Barnes & Noble to evaluate the company's financials.
Barnes & Noble did evaluate such a combination in 2008, and rejected the idea. As Sarah Weinman points out at Daily Finance, Ackman has been looking for someone to absorb Borders to salvage his investment for years. As a BN shareholder he tried to encourage that combination, and in the press he stumped for Amazon to buy Borders (even though the etailer has no interest in physical locations, and sales tax nexus, across the country).
As Rainy Day Books quipped via Twitter: "The only way Borders is buying Barnes & Noble is if somebody has a coupon AND a gift card. No free shipping, though."
WSJ
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