Why Barnes & Noble Shares Popped
Feb 25th 2013 5:01PM
Updated Feb 25th 2013 6:05PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Barnes & Noble were looking brighter today, gaining as much as 15% on word that the bookseller's founder may take the company's retail segment private.
So what: Imitating a pattern we've seen with other struggling companies such as Dell and Best Buy, Chairman and Founder Leonard Riggio offered to buy out the company's retail stores, separating them from the Nook e-book business and college bookstores, which had been put in its own business unit in October. Riggio is the company's largest shareholder, owning nearly a 30% stake, and plans to negotiate an offer price with the board. Barnes & Noble had previously broached the idea of spinning off the Nook unit about a year ago so this idea is not entirely new.
Now what: The market tends to cheer buyout offers such as this one, but without a price tag it's hard to know what to make of today's deal. There's no question that the company's growth opportunities lie with the Nook, and it's unclear what Riggio's plans for the retail business would be. Even the Nook is struggling, though. Sales fell 12.6% during the holiday period. Shareholders may welcome Riggio's cash infusion, but it's hard to see how Barnes & Noble recovers as long as Amazon.com has a target on its back.
To stay connected with Barnes & Noble updates, add the company to your Watchlist here.
The article Why Barnes & Noble Shares Popped originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.