After Elliott Advisors made a $6.50-per-share bid on June 7 to buy Barnes & Noble, other prospective buyers had until 11:59 p.m. on June 13 to put forward alternative offers. Reports surfaced last week that Readerlink was working on a counteroffer, but no new bids were received before the deadline, meaning that Elliott is officially the owner-in-waiting of America’s largest bookstore chain.
Any successful counteroffer would have required the new buyer to pay a $4 million fee to Elliott, and while it is technically still possible for another offer to be made, the breakup fee has risen to $17 million. A B&N spokesperson said that since the retailer received no new bids, it will work toward completing the purchase by Elliott, which is expected sometime in the third quarter.
The B&N deal with Elliott received a largely positive response from publishers, with big and small companies alike expressing relief that the chain had found a buyer with the resources to put it on firmer financial footing. Publishers were encouraged the most by the news that James Daunt—a bookseller who revived the fortunes of the U.K. bookstore chain Waterstones—will take over as CEO of B&N once the deal is completed. Elliott bought Waterstones in April 2018.
“Nobody was benefiting from the recent struggles of Barnes & Noble: not other bookstores nor publishers, and least of all authors, readers, and the culture of reading in this country,” said Michael Reynolds, publisher of Europa Editions. “Something needed to happen, and I think this particular something is a positive development. James Daunt has proven to be an outstanding executive for Waterstones and, most importantly, a real bookseller. If he can turn things around for the company while remaining true to the idea of Barnes being a bookstore chain, much as he has done at Waterstones, authors and readers will be well served.”
In an interview with PW, Daunt said that his priority with B&N is not to cut costs but to find a way to arrest the decline in sales and return the company to growth. The key, he said, will be investment. “Elliott expects, at some point, to sell Barnes & Noble for a lot more than they bought it for,” Daunt noted. “But they also know that they will only do that if [B&N] can make the business shinier, bigger, and better. To do that, they will need to share some of their treasure with us. The simple fact is that B&N needs money: people want to shop in places that look modern, clean, and inviting. The B&N stores look tired and need a little botox.”
The financial aspect of Elliott’s interest in B&N troubles some publishers. While Melville House publisher Dennis Johnson knows and likes Daunt (“He was the first bookseller in the U.K. to carry Melville House books,” Johnson said), he has some concerns about how Daunt turned around Waterstones and about Elliott.
“The thing is, the new-ish Waterstones seems to have embraced, more than ever, the bestseller model, and that’s a partnership with the big houses,” Johnson said. “I don’t think it’s a smart model—you can see what it’s done to B&N, which has embraced it so rigidly it’s become a death grip. And it’s certainly not a model that’s friendly to indies and others publishing something other than the homogenous.”
Johnson added that he would be more hopeful about a B&N turnaround if Daunt was calling the shots himself. “The last experience I had with a hedge fund was when hedge-fund-owned Perseus took over our distributor at the time, Consortium,” he said. “It was an unmitigated disaster.”
But like all publishers, Johnson is glad that B&N will survive. “Another 650 bookstores disappearing from the landscape would be profoundly bad news for the culture,” he added. “Kids need to see books all over the place. I just hope they get to see our books, too.”