Shares of Barnes & Noble, Inc. (NYSE:BKS) shot up 7% after it was revealed that G Asset Management had made a bid to acquire 51% of the struggling bookseller. The firm said has proposed a value of $22 a share for the company, according to the press release.
According to CNBC, Barnes & Noble, Inc. (NYSE:BKS) confirmed that it has received the offer from G Asset Management, but it does not have a comment at this time.
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GAM also offers to buy part of Nook segment
If Barnes & Noble, Inc. (NYSE:BKS) does go for GAM’s proposal to buy a 51% stake of the entire company, the firm said an alternative proposal would be to acquire a 51% stake in the bookseller’s struggling Nook segment, of which GAM also proposed acquiring 51%. That alternative offer would value the Nook segment at $5 a share. The firm said it is confident that shareholder value would be created if the Nook was separated from Barnes & Noble’s profitable retail and college division.
Earlier this month, Barnes & Noble was said to have cut its Nook hardware engineering staff, and some are calling for the company to axe the Nook completely as it has been struggling to stand up against the stronger Kindle made by Amazon.com, Inc. (NASDAQ:AMZN).
Is Barnes & Noble undervalued?
Of course both of those offers are subject to the approval of financing, due diligence and other elements. If Barnes & Noble, Inc. (NYSE:BKS) accepts the offer to buy 51% of the entire company, then GAM would need to have total access to the bookseller’s credit facility and balance sheet.
GAM has said in the past that it believes Barnes & Noble, Inc. (NYSE:BKS) is “substantially undervalued.” This new proposal is an increase from the firm’s last proposal, which was made on Nov. 15 and valued Barnes & Noble at $20 a share. At that time, GAM also suggested that the bookseller separate its unprofitable Nook division from its other divisions and recommended that the company begin a rights offering for the e-book reader segment for existing shareholders.