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Retail

Do Borders and Barnes & Noble have a future together?

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By Douglas A. McIntyre Published
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By David Polonitza

Pershing Square Capital Management, the hedge fund that successfully forced Wendy’s into their restructuring plan that saw the spin-off of Tim Horton’s, recently revealed in their 13F filing with the SEC on February 14th that they hold a stake in both Borders (11.5% of shares outstanding) and Barnes and Noble (9.2% of shares outstanding).

Pershing Square, run by William Ackman, is a very concentrated fund known for its activism, holding shares in only four companies: McDonalds, Ceridian, Borders Group, and Barnes and Noble. Both McDonalds and Ceridian’s management teams have been subject to intense pressure by activist shareholders to restructure their respective companies.

I have not seen any groups recently target Borders or Barnes and Noble, but the combination of the new firms makes sense.

Barnes and Nobles and Borders Group are the number #1 and #2 big box book stores in the country. There would be considerable cost savings in merging the two companies with respect to distribution, management, along with the increased purchasing power. Each company’s online presence is still not competitive with the likes of Amazon and might fare better combined.

Barnes and Noble and Borders Group together would be a much stronger competitor to the likes of Amazon then they are apart. With Pershing Capital Management focusing attention on the two companies, the talk of a merger or partnership will surely become louder.

Update: I discovered an article from the NY Times regarding Pershing’s activities in Barnes and Noble and Borders. It does not speculate that Mr. Ackman might try to push the companies to combine, but views both bookstores as possible LBO candidates.

Link to NY Times article

Posted by David Polonitza

http://polonitza.blogspot.com/

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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