Barnes & Noble Buyout: Leonardo Riggio Parts Ways With Nook
Barnes and Noble is considering parting ways from its Nook creation through a buyout that would split the brands into two separate companies.
Leonard Riggio, founder and chairman of the bookstore chain, has announced his intention to buy out Barnes and Noble while leaving Nook at the college bookstore as individual entities. Riggio already owns 30 percent of the company's shares and could offer new hope to the part of the business that has been under extreme pressure as the popularity of digital books rises.
Stocks rose over 9 percent on Monday after Riggio made the announcement, according to a Bloomberg report.
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"The price would be negotiated with the board, and the buyout would be funded primarily with cash," Riggio proposed in a filing with the U.S. Securities and Exchange Commission obtained by Bloomberg. "The proposal would exclude Barnes & Noble's Nook and college businesses, he said."
Barnes and Noble announced late month that it had plans to close over 200 of its stores. That's one third of their stores over a 10-year period.
"You have to adjust your overhead, and get smart with smart systems," company chief executive Mitchell Klipper told The Wall Street Journal. "Is it what it used to be when you were opening 80 stores a year and dropping stores everywhere? Probably not. It's different. But every business evolves."
The company's executives insisted that the closing of certain stores however, did not mean the book chain's demise.
"Of that number [closing], some of the stores are unprofitable while others are relocations to better properties," spokeswoman Mary Ellen Keating told CNET. "Barnes & Noble has great real estate in prime locations and the company's management is fully committed to the retail concept for the long term."
Barnes and Nobles has been struggling with Nook sales that failed to return the anticipated profit, as it was also revealed last month. The buyout could help to save the chain some experts suggested.
"He knows the book business like the back of his hand," David Strasser, an analyst with Janney Montgomery Scott LLC in New York, said of Riggio in an e-mail to Bloomberg. Barnes & Noble "could be a private company with cash flows. Turns out lots of people like books still. Nook is tougher and needs funding. E-readers have also hit a kind of wall at current penetration."
