May 20, 2011
Crazy rich guy offers $1 billion for B&N
by Dennis Johnson
The wires were on fire last night with a story headlined thusly in the Wall Street Journal: “Insane! John Malone Offers to Buy Barnes & Noble,” and with the following lede: “Whaaaa???”
And indeed, considering that, as everyone in the business knows but no one has really reported, B&N is shrinking at an alarming rate the last few months — jettisoning a store or two here, a batch of big salries there, and books themselves in favor of doodads everywhere — the details of the story are astonishing. As the next sentence in the WSJ report by Shira Ovide continues, “John Malone, the cable mogul who owns a mishmash of assets such as home-shopping channel QVC and a German cable operator, for some reason just offered $1 billion in cold cash to buy book retailer Barnes & Noble.”
Slightly less shocking is a contingent detailed in the original press release put out after hours by B&N itself: “The proposal [from Malone] states that it is contingent on the participation of founding chairman Leonard Riggio, both in terms of his continuing equity ownership and his continuing role in management.” Okay, so maybe not a surpise, according to a second WSJ report by Ovide: “This can’t be a surprise. It would be hard to push through a Barnes & Noble takeover without the support of Riggio, who holds roughly 30% of the company’s stock. And Riggio loves Barnes & Noble, so it feels unlikely he would agree to sell his shares without a stake in its future.”
A New York Times report is decidedly calmer — too calm, in fact, indicating that maybe they don’t completely get it — but nonetheless adds one pithy observation: Malone doesn’t know anything about bricks-and-mortar retail. His vast holdings include nothing of the sort.
Other interesting details, courtesy of Ovide in the WSJ:
Conveniently, Malone’s offer price is just a touch higher than the $16.96 Riggio paid last August for Barnes & Noble shares by exercising stock options he had held onto for nearly a decade. Malone could be extending an olive branch to rescue Riggio’s ownership in the unevenly profitable retailer.
Of course, Ovide gives no indication why Malone would spend $1 billion to “rescue” Riggio — just a couple of rich guys looking out for each other? — but in any event, all reports cautioned that this is just an offer and everything is preliminary.
A Forbes report details what happened next anyway: “Barnes & Noble shares rose $3.39 to $17.50 after hours.”
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives