Barnes & Noble, the publicly traded company whose major stockholder is Len Riggio, is buying Barnes & Noble College Booksellers, the private company owned by Len Riggio that manages college bookstores, for $460 million. (The total price is $596 million but includes B&N College's cash on hand.)
In a related move, B&N will secure a new $1 billion, four-year revolving credit facility, which replaces the two companies' existing credit lines. B&N will finance the purchase through $250 million in seller financing as well as from the new credit line and cash on hand.
Founded in 1965, B&N College has long been held by the Riggio family and was not included when B&N's trade bookselling division went public in 1993. With the purchase, B&N acquires the Barnes & Noble trademark, which it leased from B&N College. B&N College will be a wholly owned subsidiary of B&N, and its headquarters will remain in Basking Ridge, N.J.
B&N College manages some 624 college bookstores serving four million students and sells textbooks, course materials, trade books, insignia items, dorm supplies, etc. During the fiscal year ended May 2, its revenues were $1.8 billion and sales at stores open at least a year rose 1%. Its biggest competitor is Follett, which manages some 800 college bookstores. B&N is bullish on the college market, saying that U.S. college enrollment is projected to grow from 15.3 million students in 2000 to more than 20 million in 2015.
Because of the Riggio family's interests in both companies, a special committee of the B&N board consisting of four independent directors that was advised by a law firm and financial advisor determined the value of B&N College and negotiated the deal.
In a statement, special committee chairperson Irene Miller, a former B&N executive, commented: "Reunifying the Barnes & Noble brand and reintegrating these highly complementary businesses has long been a top priority of the [B&N] Board. College has a leading position in a market with excellent fundamentals and will add a very predictable and growing revenue stream. . . . In addition, in a rapidly changing environment, both companies will benefit from a unified digital platform and brand, which will enable the combined company to capitalize on the growing online college textbook and electronic book markets."
B&N founder and chairman Len Riggio said: "Although both companies previously thrived as separate entities, owing to distinctions in their product offerings, the definition of textbooks and tradebooks has become increasingly blurred. This trend will accelerate with eBook offerings. Thus, combining both businesses on a single branded platform will enable the combined company to cross-promote print and digital offerings to all of our customers."