B&N considering Nook spin-off

B&N considering Nook spin-off

Barnes & Noble has confirmed it is considering the possibility of spinning off its Nook business, but that it has rejected a recent offer from G Asset Management (GAM) to buy a 51% stake in the company.

B&N chief executive Michael Huseby said in a conference call following the company’s third quarter results that GAM’s offer to buy 51% of Barnes & Noble at $22 a share, valuing the company at $1.3bn, was not  “a proposal worthy of further discussion or action by us.”

He explained: "G Asset Management has one employee, extremely limited financial means, and as set forth in his letter, he has no debt or equity financing to support his proposal.”

However, he said: “We are still studying the possibility of separating the companies", to create separate units for retail books and the Nook division.

Earlier, the company released its third quarter results to the period ending 25th January 2014, revealing that it planned to launch a new Nook colour device early next year. The announcement came on the back of revenue falling 50.4% year-on-year to $157m in the quarter. Device and accessory sales were down 58.2% to $100m and digital content sales were $57m for the quarter, down 26.5% compared to a year ago.

Huseby said: “We have taken steps to reduce costs and device exposure, while focusing our efforts to reverse the content sales decline…The company is actively engaged in discussions with several world-class hardware partners related to device development as well as content packaging and distribution. As a result, we plan to launch a new Nook color device in early fiscal 2015.”

Overall, the company’s third quarter revenues fell 10.3%, to $2 billion year-on-year, but consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) increased from $59m to $173m, due to to lower Nook expenses.

The company saw a 6.3% decrease in revenue in its Retail segment to $1.4bn, which was attributed to store closures and lower online sales.