Who Will Take Borders?

Yesterday Borders Group management announced that the bookseller is up for sale. A “difficult economic environment” has spurred executives to consider strategic alternatives, they said.

We find it interesting considering that the company had a pretty good quarter, at least compared to how some retailers are faring lately. Same-store sales at Borders stores rose 2.1% year over year during the fourth quarter, while even Waldenbooks, its quickly vanishing mall chain reported a 1.2% increase. Profits were only slightly down from a year ago, at $84.7 million compared to $87.7 million. Plus, the chain is even rolling out a new prototype.

So who is going to buy this owner of 509 superstores? Pershing Square Capital Management, its website-less investor that is providing the retailer with $42.5 million? Barnes & Noble, which, according to reports might consider a such a deal? Private-equity investors, who we haven’t seen much of in the retail industry so far this year? Could it be a player north of us?

Or will the economic conditions that are spurring management to sell dissuade most buyers in the end?

4 Responses to “Who Will Take Borders?”

  1. 1 Nancy Hamel March 21, 2008 at 4:16 pm

    With sales increasing and profits only slightly down…this sale doesn’t make sense. Neither does Jones’ comment that he is being “really, really prudent.” Seems “really, really” suspiciuos, actually. However, to answer the question, since Pershing Square is already heavily invested in Borders and is expressing an interest to invest even more, I would say they are the front runners.

  2. 2 Clifford Sondock, President of the Land Use Institute March 24, 2008 at 10:20 am

    Barnes and Noble is the most suitable candidate to acquire Borders. Pershing Square owns a major interest in Borders and a minor interest in Barnes and Noble.

    Regulators’ concern for a consolidation of the 2 largest book retailers would be mitigated from the many other sources of competition from the internet and discounters such as WalMart and Target.

    The consolidation of the 2 chains would be most prudent, if regulators permit it.

  3. 3 ktr2003 March 24, 2008 at 11:21 pm

    regulators shouldn’t permit barnes and noble to acquire it. that’s a bad idea. I like Border’s better.

  4. 4 Alan March 26, 2008 at 9:26 am

    The fate of the large book store chains is headed in the same direction as the regional and local bookstores they squeezed out of the market in the past two decades as all distributors of printed media face fewer and fewer customers. Younger Americans are reading less than ever, and electronic media is clearly their preference (have you noticed what’s happen to the newspapaer industry)? Large brick and mortar book store chains will be a thing of the past in 20 years.

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