Borders Scraps Acquisition Talks
Friday, July 7th 2000, 12:00 am
By: News On 6
DETROIT (AP) â€” Book and music retailer Borders Group Inc. said Thursday it has scrapped plans to sell the company and instead will pursue other options in hopes of propping up its stock price.
The news was viewed unkindly on Wall Street, where shares of Ann Arbor-based company dropped $2.375, or 15 percent, to $13.19 on the New York Stock Exchange.
The nation's No. 2 bookstore chain, behind Barnes & Noble, announced in March its hiring of Merrill Lynch & Co. as an adviser to help explore prospects of a leveraged buyout or joining forces with another company. Borders said then ``there can be no assurance that any transaction will occur.''
In a statement Thursday, Borders said ``discussions with respect to a potential acquisition of the company have been terminated.'' The company said other options it would pursue would include share repurchases.
The statement gave no other details and did not explain whether the company attracted offers it simply deemed unsatisfactory or any other reasons for calling off acquisition talks.
``We believe Borders is undervalued in the market, and we are focused on changing that,'' Gregory P. Josefowicz, the company's president and chief executive, said in the statement.
Josefowicz and Bruce Quinnell, Borders Group's vice chairman, did not immediately return telephone messages.
Borders already has a share repurchase plan in place. In its annual report filed in April with the Securities and Exchange Commission, the company said it has remaining authorization to buy back about $62.3 million in stock.
During 1999 and 1998, respectively, Borders repurchased $25.4 million and $51.7 million of common stock.
Share repurchases boost a company's earnings per share by reducing the number of shares outstanding.
Borders Group's subsidiary Borders Inc. operates more than 300 Borders Books and Music Stores in the United States and Puerto Rico. Borders Group also has 900 Waldenbooks stores, and an electronic commerce site â€” borders.com â€” that has access to nearly 700,000 titles and more than 10 million books, music and video items.