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The award is given to the former general manager of the book sales, James Daunt, and his very prominent friends of Elliott Management's firm of activists. Elliott Management announced Friday its intention to acquire Barnes & Noble for $ 683 million. The agreement gives Barnes & Noble – who has been suffering for many years with low traffic in the stores, executive turnover and competition from Amazon's Kindle – a premium of 43%.
Barnes & Noble will be associated with Elliott Waterstones' other investment book in the UK. Daunt, who founded the Daunt bookstore chain and was later named chief operating officer of Waterstones, near death in 2011, is ready to assume the role of CEO of the entity completing the deal.
Daunt, a tough-talking Brit who started his professional career as a banker at JPMorgan, is eager to get to work to save Barnes & Noble.
"Bookstores need to change dramatically and the chain bookseller model, especially with its rows of books, just does not work anymore," Daunt told Yahoo Finance. "It worked out from a practical point of view, but I'm not sure it worked from a financial point of view."
How to save a chain of books in trouble
Daunt – who describes himself as not snobbish about books, even though he appreciates them greatly – tells Yahoo Finance that he will try to replicate his Waterstones turnaround book at Barnes & Noble. The book has saved the bookseller in the United Kingdom, with more than 200 establishments, and he is trying to master the nuts and bolts of selling books in the era of digital downloads.
In the case of Barnes & Noble, Daunt hints that it could be done to remove the unprofitable books from the stores to make them easier to buy (and lower costs), by ensuring that the store is in the image of the market in which it is present and by revitalizing the stores (Barnes & Noble stores are generally considered obsolete visually). Daunt also wants to open stores, but these are much smaller than a typical 25,000 square foot Barnes & Noble.
"I always think that a bookstore with a personality and reflecting the local environment will always do better than what is defined by someone sitting in an office somewhere," says Daunt, adding that Barnes & Noble's stores "need a little bit of love" and that he plans to "dive deep into" Elliott Management's pockets to help them improve their appearance.
A Barnes and Noble storefront is on Tuesday, May 28, 2019 in Pembroke Pines, Florida (AP Photo / Brynn Anderson).
According to Daunt, there is an urgent need to revisit Barnes & Noble's years of weak sales and pressure on profits. As an activist firm, Elliott Management will likely want to sell all of the book sales at a much higher price than the one paid. This can only be done if all activities are growing again.
"We have to do it right at the beginning," says Daunt.
Daunt and Elliott Management, however, are not short of a short-term challenge.
The book dealer, Readerlink LLC, would work on a higher offer for Barnes & Noble.
Good luck with that one. Given the deep pockets of Elliott and attacker Daun waiting to take control, it is difficult to persuade Barnes & Noble shareholders to accept an offer from Readerlink.
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