Barnes & Noble Inc Chairman Leonard Riggio has told the board he plans to buy the retail assets of the company including Barnes & Noble Booksellers Inc and barnesandnoble.com, but excluding the Nook Media business, sending the company's shares up as much as 26 percent before the bell on Monday.
Barnes & Noble shares closed at $13.51 on the New York Stock Exchange on Friday, valuing the company at about $809 million.
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Barnes & Noble's retail business has struggled in recent years as book buyers switched to digital formats, underscored by a 10.9 percent fall in sales at its bookstores and websites in the critical year-end holiday period.
"Riggio loves the (retail) business too much to let it go," Morningstar analyst Peter Wahlstrom said, adding that the business was attractive because it was slow-growing and did not need capital to keep going.
The company said in January last year that it might spin off its digital and e-reader business and in October it created a separate unit for its Nook and college bookstore chains called Nook Media, which Riggio said he would not buy.
The combined college book and Nook business, which includes the e-reader, digital content and accessories, contributed about 50 percent of total sales of $1.88 billion in the second quarter ended Oct. 27.
Barnes & Noble launched the Nook in 2009 to compete with Amazon.com Inc's market-leading Kindle, and early growth attracted a big investment from Microsoft Corp last year.
The company has poured hundreds of millions of dollars into the unit, but a disappointing holiday season has raised questions about its value.
The purchase price for the retail assets is expected to comprise mainly cash and include the assumption of certain debt, Riggio, who owns nearly 30 percent of Barnes & Noble, said in a regulatory filing on Monday. ())
Riggio, who pioneered the book superstore format in the 1980s and 1990s, said he would provide the equity financing and arrange any debt financing for the deal.
Barnes & Noble said it has set up a committee of three independent directors to evaluate Reggio's proposal.
Evercore Partners will serve as financial adviser to the company and Paul, Weiss, Rifkind, Wharton & Garrison LLP will be legal advisers, the company said.
The Wall Street Journal reported the proposed deal on Sunday.
Barnes & Noble is scheduled to report third-quarter results on Thursday.