REPORT: B&N was once about to be purchased by W.H. Smith

Meanwhile, what is going on at Barnes & Noble, the almost-last standing national book store chain in the US. Should anything happen to the chain, the book publishing world – and graphic novels with it – would be sent reeling, so hoping the company stays afloat is an anxiety inducing pastime.

And it’s one that hasn’t been made any easier by B&N’s bizarre recent business choices. Controversial CEO/founder Len Riggio left and then came back, with a series of interim temporary CEOs, and the last, Demos Parneros, getting an abrupt and mysterious firing for unnamed company transgressions.

Everyone assumed that this was some kind of #metoo moment, but this prompted Deneros to file a defamation lawsuit against B&N, which contained ample fodder for Game of Thrones type antics, including Parneros’ claim that he was fired because a potential buyer for B&N had fallen through:

Claims in Parneros’s suit indicate that his relationship with B&N chairman Len Riggio began to sour after an unnamed book retailer withdrew its offer to buy the company in June. According to the complaint, the retailer withdrew its offer after completing due diligence.

Following the collapse of the deal, Riggio, according to Parneros’s complaint, felt he “no longer had a graceful exit from the company.” Riggio also believed, per the complaint, that the only way B&N could survive is if he stayed on, and ran the company. “After the deal fell through, Riggio became hostile to Parneros,” the complaint states, adding that after the deal fell through Riggio stopped communicating with Parneros and began giving direct orders to other members B&N’s executive team.

B&N’s own response to the Parneros lawsuit counter claimed that in fact it was Parneros’ own behavior that had caused the deal the fall through. (And that, oh yeah, Parneros had several incidents of sexual harassment.)

Update: The case was settled on October 14, 2020, with a joint statement released: 

Former CEO Demos Parneros and Barnes & Noble have amicably settled all claims regarding his termination in 2018. This matter has been resolved with no judicial determination of wrongdoing. The terms of the settlement are confidential. 

While guessing the identity of B&N’s mystery suitor didn’t quite reach Third Summers Brother levels, it was still an intriguing mystery – just who would be willing to pony up for a struggling retail giant in a business atmosphere so inhospitable to them?

Well, a Wall Street Journal article ha the answer, as explained by PW:

The Wall Street Journal has reported that the company rumored to have been near an acquisition of Barnes & Noble this spring is W.H. Smith. The Financial Times added, in its own reporting, that W.H. Smith’s results for fiscal year 2017 mentioned £2 million spent on “costs related to an uncompleted transaction.” If B&N had been bought by W.H. Smith, one of the U.K.’s largest book retailers, the Journal said the move “could have transformed” the bookstore chain which is undergoing a difficult business turnaround.

W.H. Smith is a prominent UK bookstore chain, although not as large as Waterstones, and operates many transit based shops – and just last week acquired InMotion, which serves 114 stores at 43 US airports. Though smaller than B&N, it would have been a somewhat sound new parent company. Whether it was Parneros’ actions or actually kicking the tires that made them withdraw we may never know.

Is B&N savable? Despite it’s stock drops, the company isn’t inherently unprofitable, something new owners or a CEO who lasted for a while might be able to address. Waterstones and Canada’s Indigo bookchains remains successful with various book models. B&N seems to be creeping along for now, but the drama shows no signs of slowing down.