The activist fund spent $ 683 million to take over the American bookseller, ultra-powerful in the 1980s and 1990s, but which suffered from competition from Amazon and online sales in recent years. Elliott will develop synergies with Britain’s Waterstones, acquired last year.
The wheel spins. In 1998, in the romantic comedy “You have a message” with Tom Hanks, the character of Meg Ryan played an independent bookseller, threatened by a big chain which looked in every way to Barnes & Noble. The American brand was then at its peak and had revolutionized the sector, focusing on large spaces and selling games and coffee, in addition to books …
Twenty years later, it’s up to Barnes & Noble to fight for its survival. The company has just been bought by the Elliott Management fund, which paid out $ 683 million, including debt, to take control. The most important activist in the world, who notably owns stakes in eBay, Bayer or Comcast, wants to rationalize the activity of the sign, increasingly in competition with online sales and the hegemony of Amazon but who still has 627 stores across the country (compared to nearly 800 a few years ago).
The Amazon surge
Paul Singer’s fund will pull Barnes & Noble from the NYSE, where its market capitalization has collapsed. Since its peak in 2006, its title has been divided by 7, before rebounding these days against the backdrop of rumors of redemption. The markets doubt the bookseller’s ability to renew itself and resist the Amazon surge, even as Jeff Bezos’ firm has started to open physical bookstores in the United States. Amazon sells half of the new products according to Codex Group, and Wal-Mart supermarkets are also nibbling market share.
Barnes & Noble’s attempts to stem the advance of its competitor have all ended in failure, as its reader Nook, which is supposed to rival the Amazon Kindle. As a result, revenue has been halved over the past five years, even though the company was able to make a profit earlier in the year, after a net loss of $ 125 million last year.
Elliott intends to draw on his experience in the sector to relaunch the brand. The fund indeed bought Britain’s Waterstones last year. It has returned to the green after years of losses, diversifying its sources of income and developing events, such as book signings.
Elliott intends to put in place a plan that could include the closing of shops and the redevelopment of spaces. Barnes & Noble should move towards smaller stores, which will favor online orders, via tablets.
Synergies could also be found with Waterstones, whose boss James Daunt will settle in New York and take the helm of the two companies. These will however remain independent. “Eliott’s ability to influence the publishing industry is going to be stronger with its presence in two markets,” predicted Idea Logical Firm consultant Mike Shatzkin.