Ackman Offers Financing for Borders Buyout of Barnes & Noble

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.

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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%.