Bill Ackman, Pershing Square Capital founder & CEO, offers insight on the Barnes & Noble and Microsoft partnership.
looking at slightly higher than negative opening. today, squawk newsmaker and activist investor, bill ackman. always great to have you in. how are you? thanks for having me. you’re very welcome. barnes & noble, i have to ask you about that first thing, right? makes sense? okay. i have to give them credit for trying. you were a former owner of borders. and barnes & noble. bad experience. tough business. very hard. so is the bricks and mortar business — is it valued negatively? what’s interesting is people still love their bookstores. we always thought there was room for at least one bookstore. we just got the bookstore wrong. barnes & noble has done a better job. like theaters. you’re never going knot going to go to a movie. people get really upset when their bookstore closes. we thought of a bookstore as like a little shopping mall. the book is the anchor. a lot of the old sort of school businesses have been sold probably below what they’re worth, right? i mean, i was going to — even that probably at this point has more assets than the stock price. how about aol? it’s up a bunch and it should be. it’s at 18 bid now, barnes & noble from 13. and the ask is up in the mid 20s. so what happened? people just sell it beyond where it should be sold. it will take a lot of skepticism about what the nook is worth and now you have microsoft putting in $300 million. should we believe microsoft? that was my question, when you see microsoft putting $300 million, you can extrapolate out, you understand how they get to 1.7. but i remember when microsoft first invested in facebook, people said that was a strategic deal, that wasn’t a real valuation. though, obviously, facebook’s value today is much higher. i think it’s real. i think it’s real. i think they believe this is a valuable edition to their platform and they can sell our product through it. and does microsoft bring enough to barnes & noenl and the nook? i think it’s a very smart deal. i think it’s good for barnes & noble. but i still think it — you know, when i look at the price i paid for the stock five or six years ago, i wouldn’t have made money even at 18. and the big winner here, malone. he really figured this one out and bet on the nook in a way other people were not — although i don’t think it’s a profitable investment for him yet, not at net 18. but he’s a smart guy. anything new you’re thinking about that’s not out there with you? i wouldn’t say a lot in this proxy time. we will talk to hunter. and, actually, burger king. burger king? i don’t know if we have the video of it. do you remember when i saw you in tulane, we started up a conversation. we did. at the very beginning of the interview, it wasn’t even supposed to — do we have a copy of the tape? we don’t. at the beginning of the interview, he starts talking about mcdonald’s and you’re talking about — business. i said to you, are you doing anything in the space? and i don’t remember what your answer was, but it was definitely not yes. and two or three weeks later, dow this deal with business king. great new management team. they’re doing a great job. brger king, it’s not on my radar at all. .i’m a fan. wendy’s and mcdonald’s, we alternate. that’s good. more opportunity. but you have some work to do. you ha to get that — whatever that taste is, that chemical taste in the burgers. like mcdonald’s. you’re confusing us with — no, i’m not. the fire grilled — it tastes like it’s burned. no, no, you’ve got it wrong. 18 months ago, they chaengd the french fries. new management. it’s a complete restart. look at the 3 gs, right? these are the three guys that have done — you find them impressive? first glass people, easy to do business with. arguably, the best operation in the world. they’ve done this in breweries, railroads and now fast food. out of the public market, two years ago? 18 months ago. turn around in 18 months smp. yes. it’s not done yet. and this is actually — i always wonder about these types of deals. remember, they’re still going to retain 70% of the category. did they want to do this? they didn’t want to do this, right? they were going to try with the ipo. i think their plan was to keep it private for another year. and i said, look, do you really want the distraction of an ipo? we could offer them an instant ipo, keep management focused. you were part of one of these blank check companies. spak. so blank check companies historically have had a bad name. right. people looked at these and thought they were scams. correct. sole purpose acquisition corporation, yeah. actually, the old ones, you didn’t trust the investor. this one was a real trust. how did you get convinced that you wted to get into this? actually, to martin franklin nicholas did this once and did it successfully. it was very successful until i guess the top guy left. but i think they had a pretty good track record of all of the people who did spacs and they came to us and said, bill, would you like to invest? and i said, look, it’s not like us to put money intonvestment where we have no control. they said why don’t you come on as a partner. burger king is the highest quality large ft company purchased bay spac and it’s going to be a great deal. stop spraying something on the burgers. no, no, could have happened in the past. but one of the things they did is look at the quality — the quality went downhill, tu. these guys looked at everything from the ingredients to the quality of the product. they’ve completely redone the menu. and — but i always liked the burger king burgers better, true. and now they’ve fixed the fries. and have you had the salads? seriously, the new salads are burger king are actually incredible. i’m not making it up. how much of your decision to invest was because spac expired? were you running out of time? no. we had another two years. my friend wants to know what you think of this. this is a bacon sundae. how do you feel about the bacon sundae? i haven’t had it, but it likes innovative. that is bacon in the sundae? think about what drives cop assumption. so it has fat, it has sugar. what else do you need smp. i don’t know. how about salmon ice cream. how does that sound?