Although Books-A-Million’s stock price fell by 5 cents on Wednesday, to $3.13, its shares were still trading well above the $2.75 per share offer made at the end of January, when the Anderson family proposed acquiring all shares in the retailer that they did not already own. Why?
At the time of the initial proposal, BAM was selling at $1.68 per share, and the price did not reach the $2.75 offer until April 1, the day it reported improved results for 2014. Since then, the stock price has steadily increased, and its rise has been accompanied by a number of days when the trading volume was extremely high—57,500 shares were traded on May 18, the day the price hit $3.14. Some days, as few as 1,000 BAM shares are traded.
The usual reason why the stock price increases beyond an initial offer, or course, is speculation that the Andersons will up their offer (which, technically, is still not an official offer), or that a third party will make a higher bid. BAM has made no announcement about any new bids (and the Anderson family has said it is not interested in selling its shares). The company has also provided no updates on when the two-person special committee it appointed to evaluate the Anderson proposal may make its recommendation.
The Andersons withdrew their 2012 bid to take the company private after a number of lawsuits were filed charging that the offer was undervalued. The 2102 bid, while higher at $3.05 per share, offered less of a premium over the selling price than the most recent bid. The new bid, ironically, may now be viewed as low following BAM’s strong fourth quarter.
BAM’s first quarter results will be released May 29, the same day that it holds its annual shareholders meeting. Either event could include at least a brief update on the status of the Anderson proposal.
