MobileRead Forums - View Single Post - Possible merger of Borders with Barnes and Noble

jpchan · 03-01-2007, 11:29 AM

First as the top of the thread mentions this is not so much a talk of a merger as it is a major shareholder in both companies trying to push to "unlock the value of the companies." In short this shareholder is trying to make his money and run.

On the merits of a merger. I have done little research on either company so keep that in mind. If a lot of the standalone stores ( ie not attached to a shopping center. I'm thinking of the free standing locations) are outright owned by the companies and not just leased. Then there can be a lot of real estate value that can be freed up by combining competing locations. Even if they lease I assume that there are a lot of long-term leases that the combined company could get a lot of value out of by subleasing to others. This is one of the major merits that Sears could point to in their merger with K-mart. There is of course the savings and reductions in cost by reducing labor, combining distribution and as another poster pointed out further beating up on publishers on costs.

There is most likely a lot of overlap but in the customer loyalty program a combined program would provide a lot of data to mine for targeted marketing opportunities.

The reasons not to merge are also rather self evident. Anti-trust concerns. If I was a share holder of B&N I'd be very wary of taking on the rather huge debt load that Borders has (629 million). At a glance of between the 2 stocks B&n looks to be the better managed company. B&N(stock symbol BKS) looks to have double the profitability and earnings growth that Borders(BGP) has.
All these seem to me to make a merger of the 2 to be dilutive to current B&N shareholders.

03-01-2007, 11:29 AM	#20
jpchan Member Posts: 20 Karma: 10 Join Date: Nov 2006 Device: Sony Reader	some thoughts First as the top of the thread mentions this is not so much a talk of a merger as it is a major shareholder in both companies trying to push to "unlock the value of the companies." In short this shareholder is trying to make his money and run. On the merits of a merger. I have done little research on either company so keep that in mind. If a lot of the standalone stores ( ie not attached to a shopping center. I'm thinking of the free standing locations) are outright owned by the companies and not just leased. Then there can be a lot of real estate value that can be freed up by combining competing locations. Even if they lease I assume that there are a lot of long-term leases that the combined company could get a lot of value out of by subleasing to others. This is one of the major merits that Sears could point to in their merger with K-mart. There is of course the savings and reductions in cost by reducing labor, combining distribution and as another poster pointed out further beating up on publishers on costs. There is most likely a lot of overlap but in the customer loyalty program a combined program would provide a lot of data to mine for targeted marketing opportunities. The reasons not to merge are also rather self evident. Anti-trust concerns. If I was a share holder of B&N I'd be very wary of taking on the rather huge debt load that Borders has (629 million). At a glance of between the 2 stocks B&n looks to be the better managed company. B&N(stock symbol BKS) looks to have double the profitability and earnings growth that Borders(BGP) has. All these seem to me to make a merger of the 2 to be dilutive to current B&N shareholders.