April 24, 2018

For Sale? Bookseller Borders Hires Finance Firms To Review Options

By Andrew Albanese

  • Private equity firm involved
  • Sales are down
  • Barnes & Noble may be interested

Bookselling chain Borders announced last week that that it has hired J.P. Morgan Securities and Merrill Lynch to help launch a “review” of its strategic alternatives-which could include the sale of the company or some of its divisions. In addition, Borders reported that Pershing Capital, a private equity firm with a large stake in Borders and two board seats, has agreed to lend the company $42.5 million and to acquire Borders’s Australian, New Zealand, Singapore, and Paperchase subsidiaries for $125 million-if Borders cannot find a better deal.

“The review process will include the investigation of a wide range of alternatives,” read a Borders statement, “including the sale of the company and/or certain divisions for the purpose of maximizing shareholder value.” Officials, however, added that there are “no assurances that a transaction of any kind will occur.” Borders reported that fourth quarter income from 2007 was $84.7 million, down from $87.7 million in the previous year. Borders group CEO George Jones acknowledged that 2008 “will be a challenging year for retailers due to continued uncertainty in the economic environment.”

Meanwhile, LJ sister publication Publishers Weekly reported that rival bookseller Barnes & Noble, while not yet approached regarding Borders, told reporters in a year-end conference call it could have interest in buying its rival. B&N also recently reported an off year, with net income down nearly 10 percent for the fiscal year ended February 2, 2008. B&N CEO Mitch Klipper told reporters that B&N’s bottom line was hit in the fourth quarter by the “rapid deterioration” of music sales, and that customer traffic at B&N stores was down slightly.