|Bill Ackman’s Pershing Square Capital, which currently owns a 31.3% stake in Borders Group (NYSE: BGP) and had promised Borders to help finance a buyout of Barnes & Noble (NYSE: BKS), will undoubtedly suffer from the bankruptcy of Borders that was filed last week. |
According to an article from Bloomberg, Mr. Ackman had originally planned to merge Borders with Barnes & Noble in order to form a larger bookstore chain: Barnes & Noble Inc. However, the opposition of Leonard Riggio, the chairman of Barnes & Noble, as well as Borders’ bankruptcy due to its failure to appropriately adapt to digital reading made the merger difficult. Although the bankruptcy will significantly hurt Mr. Ackman’s investment, it may be a benefit for Barnes & Noble as it will most likely increase its sales.