A major shareholder in Borders is saying the company should approach Amazon.com about a merger:
NEW YORK — William Ackerman, the billionaire hedge fund manager who is a major stakeholder in Borders Group Inc., says the bookseller should consider approaching online retailer Amazon.com Inc. about a possible acquisition.
The founder of Pershing Square Capital Management said Ann Arbor, Mich.-based Borders, of which the hedge fund owns about 30 per cent, could become the “bricks-and-clicks” component of Amazon’s nationwide sales strategy. Borders, which put itself up for sale in March, has about 500 retail outlets across the country.
“Amazon could buy the company for about $400-million to get those locations that would take more than $1-billion to build,” he told reporters Wednesday on the sidelines of a conference in New York. “You have to think of it like how Apple has retail stores across the country.”
It’s easy to see how an acquisition by Amazon would be beneficial to Borders, but it’s hard to see why this would be a good deal for Amazon. After all, Amazon has made it’s name on the internet, sells more than just books, CD’s and DVD’s, and has developed a distribution system that, even using regular delivery, can have a book in your hands in a matter of days.
Ackerman, it seems, already has an answer to that question:
One reason that might persuade Amazon is that the company may soon lose its state tax advantage across the nation. Some 18 states are ramping up to require e-commerce businesses to collect sales tax, and about 1,100 online retailers have already volunteered to collect them.
Mr. Ackerman said that once Amazon loses its tax advantage that buying retail locations will make sense. He believes customers will benefit from getting same-day delivery that a network of retail stores can provide, and Amazon would also get an opportunity to sell other products not currently carried at Border’s locations.
I’m not so sure. The tax issue is still up in the air, and is likely to stay that way for some time, and, even if Amazon ends up on the losing side of that issue, it’s hard to see how the company would be benefited by being tied down to hundreds of bricks-and-mortar locations and the long-term leases that come with them.
June 13th, 2008 at 1:34 pm
er what? That doesn’t jive with the email I got from Amazon: >Starting May 31, 2008, the Borders.com/Waldenbooks.com website is no longer associated with Amazon.com. If you have been a customer of Borders.com/Waldenbooks.com teamed with Amazon.com, you have the option to receive information from Borders/Waldenbooks via e-mail–simply click on the link below and sign up by June 15, 2008: Looks like they’re separating, not merging.