Barnes & Noble Spikes After Barron's Warns Against Low Bid
Shares of Barnes & Noble (NYSE: BKS) rallied Monday after Barron's mentioned the company over the weekend.
In an article entitled, “Beware a Low Bid for Barnes & Noble,” Barron's argues that the board shouldn't let its founder and chairman, Leonard Riggio, “steal” the retail business. Specifically, Barron's says that the booksellers retail outlets alone could be worth $19 per share, and that Riggio shouldn't be allowed to make a “low-ball” offer like Michael Dell made for his company.
Last month, Riggio said that he would be interested in buying part of the company: its retail stores. This follows a trend that's grown in recent weeks where founders have tried to purchase back their struggling companies. Besides the aforementioned Dell, Best Buy's (NYSE: BBY) founder Richard Schulze has been to trying to increase his control of the company.
Barron's also mentions an outright sale of Barnes & Noble as a potential positive catalyst for the stock. Specifically, the paper suggests that Microsoft (NASDAQ: MSFT) could be interested in acquiring Barnes & Noble to jump-start its retail business and expand its investment in the Nook (Microsoft purchased a nearly 17% stake in Barnes & Noble's Nook business last year).
There's also Liberty Media, which owns about 17% of Barnes & Noble. Liberty Media has the right to block Riggio's attempts to acquire the retail stores.
One positive catalyst that Barron's doesn't mention is Barnes & Noble's high short interest. Well over one-third of the company's shares have been sold short. If a partial or total takeover looks likely, these shares would be forced to cover, sending shares strongly higher.
At any rate, Barnes & Noble's shareholders are getting rewarded on Monday, as shares hover around $16.60.
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