Barnes & Noble is getting a new owner after years of declines: Elliott Management, the giant Paul Singer-run hedge fund

  • Elliott Management is acquiring Barnes & Noble for about $US683 million including debt, the companies said Friday.
  • While the bookseller has lost half its market value in the last five years, its shares soared Thursday after The Wall Street Journal reported the deal was in the works.
  • Watch Barnes & Noble trade live.

Elliott Management, the hedge fund led by noted investor Paul Singer, is acquiring the beleaguered bookseller Barnes & Noble for about $US683 million including debt, the companies announced Friday.

Elliott is acquiring the bookseller in an all-cash transaction that’s expected to close in the third quarter. Shares of Barnes & Noble jumped early Friday on the announcement, a move that followed a 30% surge Thursday after The Wall Street Journal reported the deal was imminent.

Barnes & Noble would not mark Elliott’s first bookstore deal. Elliott acquired Waterstones, the largest retail bookseller in the United Kingdom, one year ago. That chain’s chief executive, James Daunt, will also assume the role of Barnes & Noble CEO once the deal is complete.

Elliott’s investment in the bookseller that’s lost around half of its market value in five years highlights the ongoing challenges brick-and-mortar retailers are facing in the age of online shopping and the rise of Amazon.

Read more:
We shopped at Barnes & Noble and saw a key shortcoming that’s hurting the chain in its battle against Amazon

Once a $US2.4 billion company by market capitalisation around its peak in 2006, Barnes & Noble’s market value has shrunk to just over $US436 million. Its shares traded just under $US6 apiece as of Thursday’s close.

Last year, the New York-based company was mired in legal drama involving Demos Parneros, the bookseller’s former chief executive. Parneros sued Barnes & Noble last August, saying the company falsely accused him of violating its sexual harassment policy before terminating him without severance.

At the time, Barnes & Noble said the lawsuit was “an attempt to extort money from the company by a CEO who was terminated for sexual harassment, bullying behaviour and other violations of company policies.”

In its Friday statement, Elliott said the fund is betting on the “experience” of bookstores.

“Our investment in Barnes & Noble, following our investment last year in Waterstones, demonstrates our conviction that readers continue to value the experience of a great bookstore,” Paul Best, a portfolio manager and head of European private equity at Elliott, said in a release.

Barnes & Noble will report its fiscal 2019 fourth-quarter and year-end earnings results on June 19.

Now read more markets coverage from Markets Insider and Business Insider:

A duo of stock pickers crushing 96% of their peers unpack their tactics for finding companies that customers can’t live without – and reveal their top picks

Cloudera crashes in its worst day ever after the company slashes sales outlook, announces CEO departure

Beyond Meat soars 20% after crushing expectations for its first earnings report as a public company

Barnes & Noble shares.Markets InsiderBarnes & Noble shares.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.