Ackman Offers To Finance A Borders Buyout Of Barnes & Noble

Activist hedge fund manager Bill Ackman reported a 37% stake in Borders Group Inc. (BGP), up from 31% as of May, and said he would be prepared to finance the bookseller's purchase of larger rival Barnes & Noble for about $900 million.

The proposed $16-a-share offer for Barnes & Noble compares with the book chain's $13.28 Friday closing price. Its shares, down 30% this year as of Friday's close, were inactive in recent premarket trading.

Spokesmen from Borders and Barnes & Noble weren't immediately available for comment.

Barnes & Noble last month posted its third-straight quarterly loss and gave a muted forecast, though its bottom line improved from the prior year as revenue from a college-bookselling business it bought from its chairman last year added to results.

Meanwhile, Borders has struggled amid a sharp decline in sales and customer traffic, while its margins have continued to fall. Its chairman, Bennett LeBow, has been tightening his grip on the struggling bookseller, as shareholders in September voted to give him veto power on changes to any executive officer post. His stake as of October was 35%.

Ackman often takes large stakes in the handful of companies in which he invests. He recently stepped up his position in Fortune Brands Inc. (FO), the maker of Jim Beam bourbon, Moen faucets and Titleist golf balls. The Wall Street Journal last month reported the company might cooperate with him on a breakup plan. He also recently increased his stake in J.C. Penney Co. and said he is teaming up activist efforts with Vornado Realty Trust (VNO).

Borders closed Friday at $1.08 and was inactive premarket. The stock had declined 8.5% so far this year.

 
   -By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; [e-mail]