Barnes & Noble's stock jumped by more than 20 percent after the board announced that it was considering a possible sale of the struggling company.
The board announced Wednesday that it had formed a special committee for the review of offers. Len Riggio, the long-time chairman of Barnes & Noble, made one offer. He is the largest shareholder of Barnes & Noble, with a stake of close to 20%.
Barnes & Noble, Inc. (BKS), also revealed that a shareholder they could not identify quickly built up a stake. Barnes & Noble’s board of director approved a poison-pill to prevent a hostile takeover.
The poison pill kicks in when the unknown party has 20% or more of the stock. Then, Barnes & Noble stock will be available at a discount of 50%, reducing the value.
This announcement comes after another investor revealed a stake in the company of about 7% and stated that he had spoken with Riggio regarding a possible purchase.
Riggio's shares would be voted in favor of all transactions recommended by the committee, according to the board.
Barnes & Noble is currently looking for a new chief executive after replacing its fifth in just as many years.
Early in July, the bookstore terminated its former CEO, Demos Parnaros, for unspecified violations against company policy. Barnes & Noble revealed later that Parneros was terminated due to allegations of sexual harassment and bullying.
Parneros filed a lawsuit against his former employer, in federal court, for defamation of character and firing him without reason.
Barnes & Noble has still more than 600 stores, and employs 23,000 people. The same-store sales fell 6.1% last quarter compared to a year earlier.
Barnes & Noble has seen its sales fall in each of the last four years. Barnes & Noble has struggled with new tactics such as smaller formats and kitchen concepts to win back customers.
Neil Saunders said that in September, the majority of stores "feel old, are too big and too cluttered and don't offer consumers any compelling reasons to visit and purchase."
The American Booksellers Association (a trade association) reported that independent bookstores increased by 6% to 2,470 last year.