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Why Barnes & Noble, Inc Shares Jumped

By Jeremy Bowman – Feb 21, 2014 at 8:11PM

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Shares of the bookseller spiked briefly on a buyout offer. Here's what you need to know:

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Barnes & Noble, Inc (BKS) were looking smarter today, climbing as much as 14%, and finishing up 5% on a surprise buyout offer.

So what: This afternoon, private-equity firm G Asset Management offered to purchase 51% of the bookseller at a value of $22 a share, or just the Nook unit at a value of $5 a share, if the board is uninterested in selling the entire company. G Asset had originally offered to buy the Nook segment in November at a price valuing the company at $20 a share, though that was not made public at the time, and said today that it was extremely confident that separating the Nook unit would create value for shareholders.

Now what: Barnes & Noble shares peaked at $19.19 today and closed at $17.69, both well short of the $22 offer price, indicating that the market is skeptical that the deal will go through. G Asset is a little-known firm and said that its proposal was subject to raising the necessary financing and performing due diligence, among other factors. Barnes & Noble did not issue a response to G Asset; even if management is uninterested in selling, the offer should provide some solace to investors, showing that there is a potential buyer out there for the struggling bookstore chain. Barnes & Noble will report holiday-quarter results next Wednesday. Analysts are expecting a per-share profit of $0.61 on $2.03 billion in revenue, an 8.8% drop from a year ago. 

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Barnes & Noble. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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