The Wall Street Journal reports that Sandell Asset Management, described as “an activist investor in Barnes & Noble,” has proposed to the retailer that it could go private - “with the help of current shareholders and a hefty dose of borrowings” - in a deal that would value the company at more than $650 million.

According to the story, “The effort faces a number of obstacles and indeed several attempts to take Barnes & Noble private in the past decade have fallen apart.
It calls for $500 million in debt financing, which could be a difficult ask at a time when the company and the retail sector more broadly are struggling with online competition. Another roughly $250 million would come from current Barnes & Noble shareholders keeping their stakes and rolling them over into a new private entity, but Chairman Leonard Riggio would not agree to do so, the company said. He built the chain and still owns a roughly 18% stake.”

The Journal goes on to say that “Sandell has said Barnes & Noble is a unique asset in retail and believes it can generate enough cash to handle a larger debt load, especially given the company’s relatively low level of borrowing currently and access to a $700 million credit facility.

KC's View: It would be a mixed blessing, I think. Going private might give Barnes & Noble space to make necessary changes without worrying about its share price, but I’d worry a lot about what all that debt would do to margins and, by extension, sales when they have to raise prices to pay down the debt.