Anderson Family Offers to Buy Out Books-a-Million Shares and Go Private

PublishersLunch

With Barnes & Noble all but private, the nation's second largest bookselling chain Books-A-Million may go completely private, as the controlling stakeholders at the Anderson family have offered to acquire all outstanding shares. It is a modest offer--at $3.05 per share in cash, it values the entire company at $48.8 million, and is a 20 percent premium over the closing price last Friday.

But shares traded as high as 3.50 a share in early April, and within the past year have been as high as about $4.75 a share, which led ZPR Investment Management president Mark Zavanelli to tell the WSJ  "We think the offer undervalues the company." (His firm owns approximately 300,000 BAMM shares.) The Andersons' offer would be financed using the company's own line of credit.

The Anderson family already controls 53 percent of the bookseller's shares (after taking the company public in 1992). They expect the board to "establish a special committee of independent directors with its own legal and financial advisors to review the proposal" and promise the Anderson family does not "intend to move forward with the proposed transaction unless the special committee makes a favorable recommendation to the board." A majority vote of the shares not already controlled by the Anderson's will be required for approval of the transaction.

Harsha Gowda, who in December took a 6.38 percent stake in BAMM, told us he "will have to postpone a discussion about this situation until after the proposed transaction occurs." It's worth noting that when Gowda first began accumulating his stake in the company last August 25, the share price was 2.52. By December 23, when Gowda disclosed his accumulated stake to the SEC, BAMM's share price was 2.29.

Lest any third party be tempted to join the bidding (or believe that the Andersons want to sell the whole company outright), executive chairman Clyde Anderson "also made clear that he and the other members of the Anderson family are interested only in acquiring the outstanding shares of the Company that they do not already own, and are not currently interested in considering a sale of their shares to a third party or any merger or other strategic transaction involving any third party and do not intend to vote in their capacity as shareholders in favor of any such transaction."

By Monday afternoon, the offer had already drawn out at least five law firms fishing for clients and a potential fight: one of those firms, the law office of James C. Kelly announced via press release it was looking into "possible breaches of fiduciary duty and other violations of state law in connection with the Anderson family's proposal." No doubt they will be intrigued by the resignation of Books-a-Million chief financial officer Brian White, announced just last week, replaced by R. Todd Noden.
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