Shareholders of Borders Group (BGP), including Bill Ackman's Pershing Square Capital Management and BGP Holdings, said in a regulatory filing Monday they are willing to finance a takeover bid for rival bookseller Barnes & Noble (BKS) at $16 a share in cash.
The bid is a 20.5% premium to Barnes & Noble's Friday close of $13.28. The offer price puts a total value of Barnes & Noble at about $963.2 million.
Ackman, an activist investor who tends to take large stakes in a few companies, also reported he owns a 37.3% stake in Borders, up from 31% as of May. Pershing added that it would be prepared to finance, on mutually acceptable terms, an offer for mixed stock and cash consideration.
Both booksellers have struggled, competing with discounters and online retailers such as Amazon (AMZN). Last month, Barnes & Noble reported yet another loss -- albeit it narrower than last year's -- of $12.6 million, or 22 cents a share. As DailyFinance's Sarah Weinman writes: "The company has been through proxy fights and poison pills, has been put up for sale . . . and has seen further erosion in the chain bookstore business model." Borders also saw a sharp decline in sales and traffic.
Barnes & Noble shares dropped 30% this year as of Friday's close. In premarket trading BKS shares jumped over 19%. Borders shares fell some 8.5% as of Friday's close. In premarket trading BGP shares jumped over 16%.