Barnes & Noble Education acquires MBS for digital bookstores, amid slow retail conditions

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Barnes & Noble Education Inc. (NYSE: BNED) has bought MBS Textbook Exchange LLC, a virtual bookstore operator in the U.S., for $174.2 million in cash. The MBS deal comes as BNED saw a 3.3 percent decrease in textbook sales, according to the buyer’s second quarter earnings report for fiscal year 2017.

MBS is a Columbia, Missouri-based wholesaler of new and used textbooks to more than 3,700 physical college bookstores. The target also operates more than 700 e-commerce bookstores with cost-efficient digital course materials. MBS currently sources BNED’s 770 campus bookstores and operates, an e-commerce website for new and refurbished books.

BNED and MBS will operate more than 1,490 physical and virtual bookstores as a result of the acquisition. BNED, based in Basking Ridge, New Jersey, spun off from Barnes & Noble Inc. (NYSE: BKS) in 2015 due to a slowdown in brick-and-mortar retail. The spin off came as Barnes & Noble Inc. decided to shed non-core assets, including the decision to stop competing in the tablet making business.

“We will increase our addressable market to include the growing virtual bookstore market, and will now be able to offer our campus partners physical, virtual and hybrid bookstore models,” states BNED CEO Max J. Roberts. With MBS’ wholesale and e-commerce customers, BNED will have new sales opportunities for its digital course materials.

Guggenheim Securities and Evercore provided financial advice to BNED, while Gibson, Dunn & Crutcher LLP served as legal counsel. Peter J. Solomon Company served as financial adviser to MBS and Bryan Cave LLP served as legal counsel.

The middle-market has seen a fair share of deals involving textbooks, print publications and educational services. Related deals include: Japanese publisher Nikkei Inc.’s acquisition of Pearson Plc’s FT Group for $1.3 billion, gaining control of the Financial Times newspaper; John Wiley and Sons Inc.’s (NYSE: JWA, JWB) purchase of test-prep service; and HarperCollins Canada’s completed deal for the purchase of non-fiction book titles from Wiley Canada.

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