Barnes and Noble is the largest retailer of books in the United States. It is the second largest online book retailer after Amazon.
Ron Burkle is a corporate raider. Not always a bad thing. On September 28, 2010, he is set for a proxy battle with Barnes and Noble in an attempt to gain control over the direction of the company.
Burkle is going after Barnes and Noble for a very good reason. It is a very well known company with a depressed stock. Barnes and Noble is selling very close to its book value or breakup value. The stock price is low because investors see a lackluster record due to management failures and the erosion of the stock market due to the recession.
Ron Burkle knows the company is undervalued and here’s why:
- Its Brand Name – Perhaps B&N’s most valuable asset. One of the most recognized and respected.
- As a distributor of eBooks – B&N is in a very good position to take advantage of the coming boom in eBooks.
Boom times have come before for books. It was always associated with lower costs in printing and distribution. Couple that with people wanting to read their favorite books in a newer eBook format and you have a big-time money making machine.
“The postwar boom in mass market books began about two years after the conflict ended. It was in mid-1947 when publishers first noticed that reprints were
playing an important role in publishing totals. Book production costs, freed
from wartime controls, started the the long rise that has never stopped, and it
was clear that reprinting offered the best chance to keep a wide range of books
available to the public at prices that large numbers of people could afford to
pay.”
Tebbel, John. Between Covers – The Rise and Transformation of American Book Publishing. New York: Oxford University Press, 1987
With ebooks, this will be the biggest payday for distributors and publishers ever. Reprinting books has never been easier.
More than anything, Ron Burkle wants B&N for its ability to market and distribute intangible assets.