Quote:
Originally Posted by Rebo
Borders is on the verge of bankruptcy and its stock is at a dismal $1.47 while B&N is at $15.3. A company like Borders can’t become this dismal if the management is semi-descent. It seems unbelievable for people in Main Street to understand how can the weak and the broke can come up with funding to buy out the stronger rival. It is to the best interest of B&N to just wait for Borders to go bankrupt and then pick up some of the company’s assets at a discounted price.
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Actually, Borders might be that dismal with good management. The fundamental problem is declining traffic, which is biting B&N, too,
But while B&N waiting for Borders to go belly up and buy the useful bits cheap is a reasonable notion, B&N may not have that option. Borders has a hedge fund as a minority investor, which is committing to help raise the money to let Borders make a takeover bid. If the price offered is high enough, B&N's board may choose to accept it. The board represents the shareholders, and most shareholders are primarily concerned with the price of the stock, and hence the value of their holdings.
Whether the combined company will be viable is another question.
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Dennis