Will investors be interested in two companies after Barnes & Noble split?

Barnes & Noble announced last week a split into two companies in the next year, along with its 2014 end-of-year earnings. The company could yield two public companies or Nook could be acquired in a private sale. Shares of Barnes & Noble stock jumped after the news that the retail store network would be separated from the Nook Media device, ebook and college bookstores division, which was up near 10 percent at one point in early trading. Among insiders in the industry, there is speculation that Nook could become a public company in the next year because no private buyer has emerged, according to Forbes.

Barnes & Noble’s retail division consists of more than 600 stores across the United States and the company’s website, which sells physical books online. In 2014, its revenue was $4.3 billion and its earnings before interest, taxes, depreciation and amortization was $354 million. Barnes & Noble’s college bookstore business consists of more than 600 college stores across the U.S. Its annual revenue in 2014 was $1.7 billion and its EBITDA was $115 million. Barnes & Noble’s Nook device and ebook business, which combined with the college bookstore business make up Nook Media, shrank again in 2014 and continued to lose money. In 2014, its revenue was $506 million and it lost $218 million. Nook Media had combined revenues of approximately $2.2 billion and losses of approximately $103 million last year. So, why would investors be interested in a business with a managing decline, the college bookstores, and a money pit, Nook? 

Michael Huseby, the Barnes & Noble CEO, seems optimistic. “We do believe the Nook business has value if it’s managed the way that we’re intending to manage it, which we’ve been very public about, which is pivoting that business away from a hardware-centric focus to a content platform business,” he said according to Forbes. Huseby also mentioned he is confident that the company has a lot of value in its ebook catalog and retail infrastructure after talking to other large technology companies. “It’s a scarce asset,” he said. “There are maybe one or two other catalogs in the world for reading like ours.”

 

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Nick Banks

Nick created Front Street Commercial Real Estate Group in 2002 and spent the first eight years developing and acquiring office and retail projects in South Florida as well as North Central Florida. In 2010 the focus of the firm was shifted to primarily serve third party clients and perform brokerage, property management and mortgage banking functions. Nick has personally developed and acquired nearly 200,000 square feet of office and retail properties in markets throughout Florida. Prior to founding Front Street, Nick was the Director of Finance and Dispositions for Stiles Corporation in Fort Lauderdale where he financed and sold over $500 million in commercial real estate. Before joining Stiles, Nick was an Associate Director at GE Capital Real Estate where he sourced over $200 million in financing throughout Florida. Nick is a graduate of the University of Florida with a degree in Finance and a concentration in Real Estate. He serves as a board member and current vice-chair for the United Way of North Central Florida where he also chairs the Development Committee. Nick is actively involved with the Gainesville Area Chamber of Commerce where he serves as a board member and committee member for the Council for Economic Outreach. He is also a recent graduate of Leadership Gainesville which is a year long leadership program hosted by the Chamber. He is a member of Grace United Methodist Church where he has served as finance chair and as a member of the leadership council. Nick serves as an advisory board member of the University of Florida Bergstrom Center for Real Estate Studies. Nick was recently named chair of the Gainesville committee for the North Florida chapter of Urban Land Institute (ULI). He is a licensed real estate broker in the State of Florida and is a long time member of the International Council of Shopping Centers.

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