Activist Investor Bids for Barnes & Noble, Borders Merger

Activist investor Bill Ackman, who owns 37% of Borders through his Pershing Square Capital Management, has indicated willingness to finance a merger between Borders and Barnes & Noble. The New York Times reports:

Mr. Ackman, the largest investor in Borders, has not outlined his strategy and he did not return calls for comment. What is clear, however, is that he does like to try to shake things up at a range of companies. Within the last two months alone, Pershing has announced big positions in the retailer J. C. Penney and the conglomerate Fortune Brands, which owns both Jim Beam and Titleist….Borders said in a statement on Monday that it “welcomes” his participation in pursuing a deal with Barnes & Noble.

Barnes & Noble is already in the midst of holding an auction to sell itself, after having fought off the investor Ronald W. Burkle this year. The company is in the second stage of its sales process, with about eight to 10 potential buyers having already signed confidentiality agreements, according to people briefed on the matter. Barnes & Noble’s management has been making presentations to these parties, which include strategic players and private equity firms, in recent weeks, these people added.

Major Barnes & Noble shareholders, including both Mr. Burkle and the company’s chairman, Leonard S. Riggio, are unlikely to accept Mr. Ackman’s proposed $16-a-share price, the people briefed on the matter said….A person familiar with Mr. Burkle’s thinking said, however, that the overture by Mr. Ackman represented a good starting point for an acceptable bid.

A sale is unlikely to happen this year, according to the Times. I bet Ackman would love to make up for the massive 2009 losses he incurred by investing in Target. Meanwhile, both Borders and Barnes & Noble are floundering in the wake of e-competition, making a merger look appealing.

SEE ALSO:
What You Should and Shouldn’t Do With Your Business Plan