Bloomberg News

Barnes & Noble Investor Pushes Management to Spin Off Nook

February 18, 2012

(Updates share price in fifth paragraph.)

Feb. 17 (Bloomberg) -- Barnes & Noble Inc., the largest U.S. bookstore chain, should spin off its Nook digital-reader business to increase shareholder value, said one of its largest investors.

The company is undervalued and should separate the Nook unit, possibly through a rights offering to current shareholders, Michael Glickstein, G Asset’s chief investment officer, said today in a filing. The New York-based firm said it owns 5 percent of Barnes & Noble, which would make it the fifth- largest investor in the company.

G Asset Management began writing the board about spinning off the Nook in April, according to the filing. Barnes & Noble said Jan. 5 that it was considering ways to increase shareholder value, including separating the Nook business. G Asset has communicated with other Barnes & Noble shareholders and some support the spinoff, Glickstein said, without naming them.

“I don’t see any data to support not taking action at this time,” Glickstein, 30, said in a telephone interview. There is a risk of waiting because the valuations for technology growth companies may decline, which would then reduce the value of a spinoff of the Nook, he said.

Barnes & Noble fell 1.9 percent to $13.11 at the close in New York, where the company is based. The shares gained 2.3 percent last year.

One scenario is that Nook would become a separate company, a person familiar with the situation said last month. The newly independent Nook would then sell a minority interest to investors through an initial public offering, hoping to be valued more like a technology company.

Barnes & Noble would remain majority owner, and the value assigned to the Nook shares would then be better reflected in Barnes & Noble’s stock, said the person.

G Asset Management, started in 2009, is a value investor that has also made investments in Syms Corp. and Bob Evans Farms Inc., Glickstein said.

Founder Leonard Riggio and Ron Burkle’s Yucaipa Cos. are Barnes & Noble’s top shareholders.

--Editors: Kevin Orland, Robin Ajello

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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