On June 7, Elliott Management announced that it plans to acquire Barnes & Noble (BKS) for~$683 million including debt. Elliott Management, headed by billionaire investor Paul Singer, is the largest activist hedge fund. The acquisition price is $6.5 per share, which implies a 43% premium over Barnes & Noble’s stock price on June 5. The deal was unanimously approved by the company’s board. The transaction is expected to close in the third quarter.
Stock price reaction
Following the news about the deal, Barnes & Noble shares were trading ~11% higher in pre-market trading. The stock has lost 16% of its value year-to-date until June 6. The stock rose ~30% after the rumors of the potential deal started spreading.
Focus on growth
Elliott Management acquired Waterstones last year. The company will continue to operate both of the bookstore chains independently under the same chief executive—James Daunt.
Elliott Management will take Barnes & Noble private after the acquisition, which should allow the company to make changes and invest more freely. The company has faced continued pressure from Amazon (AMZN).