Sandell Asset Management has acquired a “meaningful” stake in Barnes & Noble and, in a letter addressing the board of the struggling US bookstore chain—citing the likes of Cicero, Thomas Jefferson and Kurt Vonnegut, among others—the activist hedge fund has urged the company to consider going private.
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But private equity might not be the panacea that Sandell is seeking. Just ask now bankrupt Gymboree. Or to take another example, earlier this month the once iconic Abercrombie & Fitch announced that it would abandon discussions to sell itself after failing to find a buyer willing to match its asking price.
Indeed, PE investment in the retail industry is dropping off. Investors have made just 117 deals in the global retail sector representing $11.6 billion so far in 2017, per the PitchBook Platform, putting it on pace for the weakest performance for the sector since at least 2013:
On the other hand, Barnes & Noble has a few things going for it that might make it a more appealing target for a take-private deal than other retailers. After all, unlike apparel, footwear, grocery and home furnishing chains, there are now few other brick-and-mortar retail options for buying a book—thanks to Amazon.
That could inspire would-be buyers otherwise wary of retail to pick up the bookstore, if not a book.
Read more of our coverage of the retail space.