Leonardo Riggio, Chairman of Barnes and Noble, announced today that he is planning on purchasing retail assets of Barnes and Nobile and their official website. However, he also explained that he doesn’t have any plans in purchase their associated Nook business anytime now. This increased the company’s shares by 26% and they ended up reaching $14.50. Keep in mind that the current market value of the company is about $800 million.
The retail business has definitely suffered during the past few years due to many book buyers preferring to read books online. This has resulted in a decrease of book sales by 10.8% in the United States. The company explained that they are planning to combine their digital business from Nook chains in the future in a more effective manner. This combined business is going to include e-readers, accessories, books, and unique digital content. This is expected to increase the profit of the company to $1.5 billion during the next quarter. It is unknown how this will affect the company’s profit in the long-term but experts predict that will enable the company to minimize some of their losses.
Barnes and Nobile previously launched their business launched Nook during 2009 to withstand the strong competition from Amazon.com. They did by the help of investors from Microsoft investors as well but the main issue here is that holiday sales ended up being very disappointing. The buying price of all the different retail assets is going to comprise cash and debt assumption. Leonardo Riggio currently owns about 30% of the company and he explained that he is going to provide all the necessary equity financing to ensure that this deal goes well. He also explained that he has already planned a meeting with three directors so the new proposal can be professional evaluated. This will also ensure that other professionals are going to be interested in investing in the business later on.
If this deal ends up going well, then there is still hope for book retailers in the United States. However, experts believe that these retailers aren’t doing enough when it comes to selling the books such as providing customers with promotions or incentives. There hasn’t been any explanation of what is going to happen with the Nook business but it is obvious that it isn’t going to be part of the deal either now or in any of the other deals the future.