Why Barnes & Noble, Inc Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Barnes & Noble, Inc  were looking smarter today, climbing as much as 14%, and finishing up 5% on a surprise buyout offer.

So what: This afternoon, private-equity firm G Asset Management offered to purchase 51% of the bookseller at a value of $22 a share, or just the Nook unit at a value of $5 a share, if the board is uninterested in selling the entire company. G Asset had originally offered to buy the Nook segment in November at a price valuing the company at $20 a share, though that was not made public at the time, and said today that it was extremely confident that separating the Nook unit would create value for shareholders.

Now what: Barnes & Noble shares peaked at $19.19 today and closed at $17.69, both well short of the $22 offer price, indicating that the market is skeptical that the deal will go through. G Asset is a little-known firm and said that its proposal was subject to raising the necessary financing and performing due diligence, among other factors. Barnes & Noble did not issue a response to G Asset; even if management is uninterested in selling, the offer should provide some solace to investors, showing that there is a potential buyer out there for the struggling bookstore chain. Barnes & Noble will report holiday-quarter results next Wednesday. Analysts are expecting a per-share profit of $0.61 on $2.03 billion in revenue, an 8.8% drop from a year ago.