In a rare sign of sanity in the executive suites of corporate America, it looks like one potential deal that had been the subject of wide speculation will not be happening
The Wall Street Journal reports that Barnes and Noble (BKS) is unlikely to make a bid for Borders (BGP), the beleaguered bookseller facing serious liquidity problems.
According to The Journal, Barnes and Noble is skeptical about whether it could secure financing for a deal and is also concerned about the length of some of the leases Borders has entered into. Shares of Borders seem a good candidate for a pummeling in Thursday trading. Think about it: as a major competitor, Barnes and Noble is one of the few potential suitors that has an opportunity for significant synergies and cost-cutting from a Borders acquisition. If Barnes and Noble isn’t interested in Borders at its badly-depressed share price, it’s hard to imagine why anyone else will be. The Journal speculates that private equity firms could be interested, but I wouldn’t jump into the stock anticipating that. What could they see that Barnes and Noble doesn’t?
Borders claims to be optimistic about the prospects for its new store format, but its liquidity issues and general malaise in brick and mortar book-selling will likely hinder any real upside there. With macroeconomic headwinds, a $591 billion debt load, and its most obvious suitor apparently off the table, Borders may be running out of options.
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Zac Bissonnette
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