G Asset, a little known firm, announced its offer to purchase 51 percent stake in Barnes and Noble Inc. or its digital business Nook on Friday. This purchase would prove to be a buyout bid for the company and the proposal would be for $22 a share, putting a value of $1.32 billion for the US top bookstore. They gave an alternative offer for Nook at $5 a share stating that the digital side would create “substantial shareholder value.”
G Asset did not say how they planned to finance the deal; however, they did say that Barnes and Noble is “substantially undervalued.” Barnes and Noble has been trying to change the results as more consumers are turning to digital books or buying online. The company’s sales fell around 6 percent at its physical locations during the holiday season. Barnes and Nobles has heavily invested in its digital book business however sales for the Nook have been dropping.
Barnes and Noble commented on Friday that it had received the offer from G Asset however they did not say whether or not they would be entertaining the offer. This is not G Assets first attempt at a buyout bid for the company. The firm has made an offer to buy 51 percent of shares in the company before in 2012, however, the offer was not accepted.
Barnes and Noble shares are up 5.8 percent valued at $17.75 apiece in afternoon trading with a high of $19.12 after news of the buyout was released. Most analysts agree that the deal will most likely fall through. Barnes and Noble has declined to comment on anything further than acknowledging they have received the offer.
Barnes and Noble created the Nook program to rival companies like Amazon and Apple. However, lately they have slowed its Nook business and are looking more towards content and software. Microsoft had invested $300 million in the unit for a 17 percent stake, putting a value on the division of $1.7 billion. Also in 2012, Pearson PLC claimed a 5 percent stake in the unit for $89.5 million.
G Asset said if it were successful in staking claim on the Nook business, it would spin it off in to its own entity separating it from Barnes and Noble retail stores and college stores. The firm valued Nook shares at $5 each. Barnes and Noble reports its Nook division sales separately from its retail side since 2012 as it looked for ways to become more profitable.
G Asset, managed by Michael Glickstein, is a New York based firm that serves as the private investment manager to funds and some managed accounts. However, when Bloomberg News did a search of the SEC database looking for registered investment advisors in found no results for G Asset. Glickstein has an employment history ranging from Goldman Sachs to Mercer Partners LP and even the now defunct group Pequot Capital.
It is still unclear if Barnes and Noble will accept G Assets buyout bid, a spokeswoman only went as far as to acknowledge receipt of the bid. The company could be holding out unit Thursday when it will report its quarterly earnings.
By Adam Stier