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Barnes & Noble shares surge as activist investor urges the bookstore chain to sell itself

Source: FactSet

“What makes the under-valuation of Barnes & Noble all the more shocking is that, as opposed to the numerous other national apparel, footwear, grocery, and home furnishing chains abounding in this country, there is but one truly national bookstore chain,” Sandell’s CEO, Thomas Sandell, said.

The firm added that it believes Barnes & Noble’s roughly $520 million market value today is “unconscionably low.” As the public market for retail stocks is inherently “risky” today, this could be one reason for the lower value, Sandell said.

Sandell has called on Barnes & Noble to retain an investment bank to explore strategic alternatives, which aim at “achieving a privatization.” The activist investor doesn’t believe Barnes & Noble should continue to operate as a stand-alone public company.

This wouldn’t be the first time Barnes & Noble was faced with the idea of going private, either.

The retailer has explored deals in the past to sell or break itself up, including a buyout attempt by Barnes & Noble Chairman Leonard Riggio, who remains the bookstore chain’s largest shareholder.

Also, in 2009 another activist investor, Ronald Burkle, began accumulating shares in Barnes & Noble and eventually waged a proxy fight, which he failed to win.

Earlier this year, faced with many questions about the company’s future and amid growing pressure from Amazon’s book business, Barnes & Noble CEO Demos Parneros told investors, “We’re examining every aspect of the business and our customer value proposition.”

—CNBC’s Leslie Picker contributed to this reporting.

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