Barnes&Noble.com to Buy Fatbrain.com
John Mutter &Calvin Reid -- 9/18/00
Deal valued at about $64 million, 75% in B&N.com stock
In the largest example so far of consolidation among online book retailers, Barnes&Noble.com is buying Fatbrain.com. The deal is valued at about $64 million, with 75% of that in B&N .com stock (at $4.25 a share) and the rest in cash. Under the terms of the deal, Fatbrain.com will become a wholly owned subsidiary of B&N.com. The deal is subject to regulatory approval and is expected to close in about 90 days.
Fatbrain.com is the third-largest online bookseller in the U.S., specializing in professional and technical titles for the corporate market. B&N.com is the second largest online book retailer; it is 40% owned by Barnes & Noble and 40% by Bertelsmann.
Fatbrain management, including president and CEO Dennis Capovilla and executive v-p, development, Kim Orumchian, will remain with the company. In a conference call announcing the merger, Steve Riggio, vice-chairman of B&N. com, described the deal as a "good strategic fit" that centered on Fatbrain's focus on the B2B document market and its digital-publishing ventures. "We can open more doors for Fatbrain's corporate document business," said Riggio, "and this makes B&N.com's general-interest book inventory available to Fatbrain's corporate customers."
The deal particularly highlights B&N.com's aggressive moves into the nascent e-publishing and print-on-demand market. B&N.com already owns a 49% stake in print-on-demand subsidy publisher iUniverse.com. The online retailer recently launched an e-book superstore in conjunction with Microsoft and now, with the Fatbrain merger, B&N.com will own more than half of MightyWords, the publisher and retailer of short, downloadable electronic material aimed at both the business document and consumer markets. Fatbrain.com spun off MightyWords as a separate company earlier this year (News, June 12) while retaining a 23% stake in the online publisher and retailer. B&N.com already had a 30% stake in MightyWords and will also take Fatbrain's 23% investment.
In a related item, Fatbrain total revenues rose 106.8%, to $15.3 million, in the second quarter ended July 31, from $7.4 million in the same period a year ago. The net loss jumped 35.6%, to $8 million, from $5.9 million.
Volume 246 Issue 38 09/18/2000