Borders Reorganisation: News bids?

[fjtorres]

Originally Posted by SensualPoet

One wonders if it was News Corp's HarperCollins that "pulled the plug". They appear to have a few distractions near the top at the moment ...

HC would be on my very short list of likely idiots.
So would MacMillan.

With 60% of their dollar volume flowing through just 4 vendors, they just killed off number 3 leaving entire regions without a single deep catalog B&M retailer and giving B&N and Amazon over 50% of the market.
Typical BPH thinking: First they bemoan the loss of retail shelf space and then they make sure it happens.

(sigh)

Pre-bankruptcy:
http://www.publishersweekly.com/pw/b...ade-books.html

I expect B&N stock to see a decent boost, so Liberty Media won't be happy either.

[Fbone]

Originally Posted by fjtorres

Pre-bankruptcy:
http://www.publishersweekly.com/pw/b...ade-books.html

I expect B&N stock to see a decent boost, so Liberty Media won't be happy either.

Interesting link. The totals add up to 72% or so. I wonder who sells the other 28%. The wholesalers like Ingram and B&T to school's and libraries?

[SensualPoet]

Originally Posted by fjtorres

Pre-bankruptcy:
http://www.publishersweekly.com/pw/b...ade-books.html

I expect B&N stock to see a decent boost, so Liberty Media won't be happy either.

But we live in parlous times, as the saying goes.

B&N stock price has flirted with $21, but Liberty Media's offer of $17 per share is more-or-less where the stock has floated since the announcement was made. It was trading as low as $9 only days before Liberty stepped in. B&N has its own woes: it is investing in its digital products (Nook and Nook books), spending so much to prime that pump that it has cut its dividend to zero.

Liberty's offer is a cosy one: Leonard Riggio and John Malone have issued gushy comments about each other's businesses in recent weeks; unlike the previous takeover bid last summer, this one is far from hostile.

The closing of Borders certainly won't hurt B&N but it won't pick up 100% of its sales, either. Borders represented less than 15% of trade book sales in 2010 in the US; for a variety of reasons -- including distance from a closed Borders store -- B&N is likely to see a 3 or 4% lift in US marketshare -- as much as 15% at the bricks and mortar side of the business. Or perhaps very little at all, depending on the economy and further consumer adoption of ebooks.

The chaos in Washington over the debt ceiling and budget talks can't be helping, nor is the persistent unemployment rate at over 9%. Liberty Media, at least based on public information, is hardly incented to rush along putting $1 billion on the table to purchase B&N -- given there is clearly no other party interested in being in the book business in the US. That is abundantly clear from the lack of bidders for Borders.

[fjtorres]

Originally Posted by SensualPoet

The closing of Borders certainly won't hurt B&N but it won't pick up 100% of its sales, either. Borders represented less than 15% of trade book sales in 2010 in the US; for a variety of reasons -- including distance from a closed Borders store -- B&N is likely to see a 3 or 4% lift in US marketshare -- as much as 15% at the bricks and mortar side of the business. Or perhaps very little at all, depending on the economy and further consumer adoption of ebooks.

Best case, theoretical, scenario for B&N would be about half of Borders' share, given the quoted 75% overlap of sites. So B&N could add up to 7% extra share and get to 30%. Maybe more if they pick over the carcass for a few choice sites.

Amazon's share of Borders' business is going to come mostly from the orphaned regions without B&N overlap and what little online sales they had, so I doubt they'll pick up more than 3-4% that way. However, they have been growing their share faster than anybody, so getting to 20+ percent should be easy.

So far, ebook mainstreaming hasn't impacted the print business much but that isn't going to last. Given the adoption rate of dedicated readers for the last year, I think ebooks should be able to hit 30-40% unit sales penetration in a year or two and that is definitely going to require cannibalization and lead to a likely dollar volume contraction, which is why nobody is eager to bid much for Borders' business. All those $2.99-6.99 ebooks are going to wreck havoc on industry median prices. Already are, no?

With the winds blowing that way, it really doesn't make much sense to be getting into the print book side of the business if you're not already in it. Even Najafi was most likely looking to Borders as a trampoline to digital sales more than a long term business unto itself.

At this point, odds are the Borders name is probably the most valuable asset in the liquidation.

[SensualPoet]

Oh, my. WSJ is reporting breaking news:

Borders will ask judge to approve a liquidation on Thursday, scrapping its auction plan.

So, that's that. No last minute bid for a going-concern operation. Borders is headed straight to final liquidation.

[Teyrnon]

Originally Posted by SensualPoet

So, that's that. No last minute bid for a going-concern operation. Borders is headed straight to final liquidation.

Sad news. I was holding out hope that Borders might somehow be able to continue as an active presence. I'm going to miss the local Borders. At least I still have Barnes & Noble I guess.

[fjtorres]

Local TV news just announced the closure of the only Borders left.
No B&N.
And since Borders decimated the indies, it's Amazon or nothing for the 4 million people in the region.
As of now it is oficially easier to find a Kindle at retail than any given BPH pbook.

[Ervserver]

11,000+ just lost their jobs ... :

[advocate2]

Here in Vegas BN has mediocre locations and Borders had the best in Town Center.

I would not be surprised to discover that BN is already in discussions to take over the lease.

Let's say the top 20-30% in sales per store are not shut down but rather have the leases assigned to BN. What dragged Borders down were too many unprofitable stores.

The best time to pick up a deal on a location acquisition is during the liquidation. Why is everybody assuming that bids for 20 or 30 stores grouped together won't come in? It is possible that the other bidders will try to pick up the best locations. We just don't know what percentage of the Borders stores were profitable.

Under the Bankruptcy Code, the Trustee, or debtor in possession, has the ability to assume and assign the underlying leases. The building owner does not have the ability to stop the assignment.

The major mall owners will be setting out the welcome mat to BN, which will never again have an opportunity like this.

[SensualPoet]

I wouldn't be too sure about that. Barnes and Noble is hardly in an expansion mode as far as its bricks and mortar business is concerned. It would have to be a very small handful of super desirable locations for B&N to invest in one of these stores.

B&N also faces a touch quarter as all the air will be sucked out of the book business as Borders closes 400 stores abruptly over the next 10 weeks or so. B&N already complained about the impact of Borders closing some stores in the previous financial period. It's a temporary thing but not helpful to cash flow for what is already a marginal business.

However, all this might speed up B&N's $1 billion merger with Liberty Media. Or perhaps Liberty might feel it can wait a while longer and get a better price as clearly no one is interested in buying a book chain at this point.

[Fbone]

And Books-A-Million had a negative quarter. Their second in a year. I thought maybe they would pick up a few locations but commercial leases are pricey.