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| Barnes & Noble Is Sold to Hedge Fund After a Tumultuous Year | Barnes & Noble Is Sold to Hedge Fund After a Tumultuous Year |
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| Barnes & Noble has been acquired by the hedge fund Elliott Advisors for $638 million, a move that has momentarily calmed fears among publishers and agents that the largest bookstore chain in the United States might collapse after one of the most tumultuous periods in its history. | Barnes & Noble has been acquired by the hedge fund Elliott Advisors for $638 million, a move that has momentarily calmed fears among publishers and agents that the largest bookstore chain in the United States might collapse after one of the most tumultuous periods in its history. |
| The sale was announced Friday morning after months of speculation over the future of Barnes & Noble. The acquisition follows Elliott’s purchase of the British bookstore chain Waterstones in June 2018. James Daunt, the chief executive of Waterstones, will also act as Barnes & Noble’s C.E.O. and will be based in New York. | The sale was announced Friday morning after months of speculation over the future of Barnes & Noble. The acquisition follows Elliott’s purchase of the British bookstore chain Waterstones in June 2018. James Daunt, the chief executive of Waterstones, will also act as Barnes & Noble’s C.E.O. and will be based in New York. |
| It marks a surprising new chapter in the 40-plus-year history of Barnes & Noble, which evolved from a single Manhattan bookstore in 1971 and grew into a national fleet of superstores. In the 1990s, Barnes & Noble was often vilified as a greedy corporate giant that slashed book prices to lows that its competitors could not match and helped put struggling independent booksellers out of business across the United States. | It marks a surprising new chapter in the 40-plus-year history of Barnes & Noble, which evolved from a single Manhattan bookstore in 1971 and grew into a national fleet of superstores. In the 1990s, Barnes & Noble was often vilified as a greedy corporate giant that slashed book prices to lows that its competitors could not match and helped put struggling independent booksellers out of business across the United States. |
| But in recent years, Barnes & Noble has been decimated by the strength of online booksellers like Amazon and struggled to make a profit. The company has closed more than 150 stores in the last decade or so, leaving it with 627. | But in recent years, Barnes & Noble has been decimated by the strength of online booksellers like Amazon and struggled to make a profit. The company has closed more than 150 stores in the last decade or so, leaving it with 627. |
| “The loss of Barnes & Noble would have been catastrophic for the industry,” said Carolyn Reidy, president and chief executive of Simon & Schuster. | |
| Mike Shatzkin, the chief of the Idea Logical Company, a book industry consulting firm, said a sale was probably the best outcome for the company’s future. | Mike Shatzkin, the chief of the Idea Logical Company, a book industry consulting firm, said a sale was probably the best outcome for the company’s future. |
| “Somebody else had to save Barnes & Noble — the present ownership succeeded in a completely different environment and was not ready to jump into the 21st century,” he said. “The fact that they own Waterstones certainly puts them in the right direction. Their ability to influence the publishing industry is going to be stronger being in both markets.” | “Somebody else had to save Barnes & Noble — the present ownership succeeded in a completely different environment and was not ready to jump into the 21st century,” he said. “The fact that they own Waterstones certainly puts them in the right direction. Their ability to influence the publishing industry is going to be stronger being in both markets.” |
| The all-cash transaction valued Barnes & Noble stock at $6.50 a share, a premium of nearly 42 percent over the retailer’s stock price on Wednesday, before a report by The Wall Street Journal about an impending deal drove up the price on Thursday. At midday Friday, the stock was up more than 12 percent, at $6.68 a share. | The all-cash transaction valued Barnes & Noble stock at $6.50 a share, a premium of nearly 42 percent over the retailer’s stock price on Wednesday, before a report by The Wall Street Journal about an impending deal drove up the price on Thursday. At midday Friday, the stock was up more than 12 percent, at $6.68 a share. |
| The sale was approved unanimously by Barnes & Noble’s board. Leonard Riggio, the company’s founder and chairman, said in a news release: “In view of the success they have had in the bookselling marketplace, I believe they are uniquely suited to improve and grow our company for many years ahead.” | The sale was approved unanimously by Barnes & Noble’s board. Leonard Riggio, the company’s founder and chairman, said in a news release: “In view of the success they have had in the bookselling marketplace, I believe they are uniquely suited to improve and grow our company for many years ahead.” |
| Mr. Daunt is well regarded in the publishing industry for rescuing Waterstones from near bankruptcy. | Mr. Daunt is well regarded in the publishing industry for rescuing Waterstones from near bankruptcy. |
| “James Daunt is a terrific bookseller and his focus in the U.K. has been bringing customers in and making book retail exciting,” Ms. Reidy said. “It bodes well for not just having a solid Barnes & Noble, but for having a growing Barnes & Noble.” | |
| Waterstones has pursued a strategy that some analysts say is the only way to compete in a marketplace dominated by online sales, by allowing individual Waterstones booksellers to tailor each store to the needs and interests of its community. Mr. Daunt, who took over in 2011, has said Waterstones operates more like a constellation of independent stores than a homogeneous chain. | Waterstones has pursued a strategy that some analysts say is the only way to compete in a marketplace dominated by online sales, by allowing individual Waterstones booksellers to tailor each store to the needs and interests of its community. Mr. Daunt, who took over in 2011, has said Waterstones operates more like a constellation of independent stores than a homogeneous chain. |
| Mr. Daunt, who ran his own bookstore chain, Daunt Books, before taking charge of Waterstones, said he planned to apply a similar approach with Barnes & Noble. | Mr. Daunt, who ran his own bookstore chain, Daunt Books, before taking charge of Waterstones, said he planned to apply a similar approach with Barnes & Noble. |
| “The main thing is that there isn’t a template; there’s not some magic ingredient,” he said in an interview on Friday. “The Birmingham, Ala., bookshop, I imagine, will be very different from the one in downtown Boston. They don’t need to be told how to sell the exact same things in the exact same way.” | “The main thing is that there isn’t a template; there’s not some magic ingredient,” he said in an interview on Friday. “The Birmingham, Ala., bookshop, I imagine, will be very different from the one in downtown Boston. They don’t need to be told how to sell the exact same things in the exact same way.” |
| While Barnes & Noble and Waterstones will operate independently, they will “benefit from the sharing of best practices between the companies,” the news release said. | While Barnes & Noble and Waterstones will operate independently, they will “benefit from the sharing of best practices between the companies,” the news release said. |
| Barnes & Noble’s new owner, Elliott Advisors, is an affiliate of Elliott Management, an activist fund founded by Paul Singer. | Barnes & Noble’s new owner, Elliott Advisors, is an affiliate of Elliott Management, an activist fund founded by Paul Singer. |
| Elliott spent more than a decade in a vicious fight over bond payments with Argentina, whose former president Cristina Fernández de Kirchner called Mr. Singer a “vulture lord” and his firm a “financial terrorist.” In 2016, the country paid Elliott $2.4 billion, a 392 percent return on the original value of the bonds. | Elliott spent more than a decade in a vicious fight over bond payments with Argentina, whose former president Cristina Fernández de Kirchner called Mr. Singer a “vulture lord” and his firm a “financial terrorist.” In 2016, the country paid Elliott $2.4 billion, a 392 percent return on the original value of the bonds. |
| Mr. Singer has given money to campaigns supporting same-sex marriage and is an influential Republican donor. He was a major critic of President Trump until after the election, when he donated $1 million to Mr. Trump’s inaugural fund. | Mr. Singer has given money to campaigns supporting same-sex marriage and is an influential Republican donor. He was a major critic of President Trump until after the election, when he donated $1 million to Mr. Trump’s inaugural fund. |
| Before Elliott bought Waterstones, which operates more than 280 stores, the chain was struggling, posting negative earnings in 2012. It now has a double-digit margin. For its 2018 fiscal year, it had sales of more than 385 million pounds, or about $490 million. | Before Elliott bought Waterstones, which operates more than 280 stores, the chain was struggling, posting negative earnings in 2012. It now has a double-digit margin. For its 2018 fiscal year, it had sales of more than 385 million pounds, or about $490 million. |
| Mr. Daunt acknowledged that Barnes & Noble faced significant challenges as it sought to reverse years of decline and Amazon continued to gobble up market share, but he expressed confidence that investing in stores would pay off in the end. | Mr. Daunt acknowledged that Barnes & Noble faced significant challenges as it sought to reverse years of decline and Amazon continued to gobble up market share, but he expressed confidence that investing in stores would pay off in the end. |
| “That tide has been only going in one direction for a while, and we have to reverse that,” he said. “And you do that by running really nice bookshops.” | “That tide has been only going in one direction for a while, and we have to reverse that,” he said. “And you do that by running really nice bookshops.” |
| In recent years, the future of Barnes & Noble has looked grim. Its longtime strategy of beating competitors through the sheer volume of its offerings no longer provided an advantage in an era of online retail. Many in the book business have been bracing themselves for the chain’s possible demise, which would be a devastating blow to the publishing industry. | In recent years, the future of Barnes & Noble has looked grim. Its longtime strategy of beating competitors through the sheer volume of its offerings no longer provided an advantage in an era of online retail. Many in the book business have been bracing themselves for the chain’s possible demise, which would be a devastating blow to the publishing industry. |
| The turmoil was compounded by a series of management crises. Last summer, Barnes & Noble fired its chief executive, Demos Parneros, who was the fourth chief executive to depart in five years. He had been in his role for just over a year when he was ousted, in part because of claims of sexual harassment by an employee. | The turmoil was compounded by a series of management crises. Last summer, Barnes & Noble fired its chief executive, Demos Parneros, who was the fourth chief executive to depart in five years. He had been in his role for just over a year when he was ousted, in part because of claims of sexual harassment by an employee. |
| Mr. Parneros later sued the company, claiming defamation and breach of contract. Barnes & Noble filed a countersuit, arguing that Mr. Parneros’s lawsuit “downplays what occurred” and blaming him for “disloyal conduct” that sabotaged the company’s potential sale. Both cases are continuing. | Mr. Parneros later sued the company, claiming defamation and breach of contract. Barnes & Noble filed a countersuit, arguing that Mr. Parneros’s lawsuit “downplays what occurred” and blaming him for “disloyal conduct” that sabotaged the company’s potential sale. Both cases are continuing. |
| Mr. Riggio’s vision of mass-market stores stocking more than 100,000 titles was considered radical back when bookselling was viewed as a genteel, quaint and not particularly lucrative industry. | Mr. Riggio’s vision of mass-market stores stocking more than 100,000 titles was considered radical back when bookselling was viewed as a genteel, quaint and not particularly lucrative industry. |
| The company’s dominant position in the retail ecosystem began to erode with Amazon’s arrival. Barnes & Noble struggled to match Amazon’s vast selection and its integrated e-reader and e-book marketplace. In an effort to carve out a piece of the digital marketplace, Barnes & Noble introduced its Nook e-reader and self-publishing platform. The company’s digital strategy turned out to be a financial disaster. It has lost more than a billion dollars on its Nook business, and online sales remain anemic. | The company’s dominant position in the retail ecosystem began to erode with Amazon’s arrival. Barnes & Noble struggled to match Amazon’s vast selection and its integrated e-reader and e-book marketplace. In an effort to carve out a piece of the digital marketplace, Barnes & Noble introduced its Nook e-reader and self-publishing platform. The company’s digital strategy turned out to be a financial disaster. It has lost more than a billion dollars on its Nook business, and online sales remain anemic. |
| “For everybody else, the digital business is 30 percent and growing by double digits,” said Ryan Vaughan, an analyst at Needham & Company. “These guys, it’s 5 percent and shrinking.” | “For everybody else, the digital business is 30 percent and growing by double digits,” said Ryan Vaughan, an analyst at Needham & Company. “These guys, it’s 5 percent and shrinking.” |
| In recent years, there have been encouraging signs that the print retail business is rebounding, and publishers hope that a revitalized Barnes & Noble could take advantage of that shift. Independent bookstores are thriving again, and print sales are rising while e-book sales are declining. Even Amazon is investing in physical bookstores across the country. | In recent years, there have been encouraging signs that the print retail business is rebounding, and publishers hope that a revitalized Barnes & Noble could take advantage of that shift. Independent bookstores are thriving again, and print sales are rising while e-book sales are declining. Even Amazon is investing in physical bookstores across the country. |