Hedge fund Sandell Asset Management urges Barnes & Noble to consider a sale. The bookseller has struggled in recent years amid increasing competition from Amazon.

(Bloomberg)—Sandell Asset Management Corp., the sometimes-activist hedge fund, is urging Barnes & Noble Inc. to explore a sale amid a hostile environment for retailers.

Shares in the bookseller, No. 69 in the Internet Retailer 2017 Top 500, rose 15% to $8.17 at 1:41 p.m. in New York after earlier gaining as much as 18%, the biggest jump since 2013.

The New York-based hedge fund has built a “meaningful position” in Barnes & Noble, it said in a letter to the board on Tuesday. Sandell said the company should explore a sale, which could fetch more than $12 a share, or a 69% premium over where shares closed on Monday.

“Stakeholders would be better served if Barnes & Noble were operated as a private company or as a division within a larger company, which would allow management to focus 100% of its attention on the company’s underlying operations,” the fund’s CEO Tom Sandell said in the letter.

A purchase price of $1 billion, almost double Barnes & Noble’s market value, would be a “rounding error” for internet or media companies looking for a retail presence, Sandell said. Amazon.com Inc.’s agreement to buy Whole Foods Market Inc. and Sycamore Partner’s proposed deal for Staples Inc. are evidence that investors are recognizing “quality” retail stocks are undervalued. Amazon is No. 1 in the Top 500; Staples is No. 5.


“Neither Mr. Sandell nor anyone from his hedge fund has reached out to us yet, but we welcome constructive dialogue with all of our shareholders,” said Mary Ellen Keating, a spokeswoman for Barnes & Noble.

Barnes & Noble has had an uphill battle against the likes of Amazon as customers do more of their shopping online and products meant to compete with those from the internet giant, such as the Nook e-reader platform, have seen sales slip.

The company previously put itself up for sale in 2010 after pressure from activist investor Ron Burkle. Liberty Media Corp. invested $204 million in Barnes & Noble in 2011 after withdrawing a proposal to acquire the whole company.