B&N.com Deal Will Close in Late April

Barnes & Noble's purchase of Barnes & Noble.com probably won't be completed until the end of April, Marie Toulantis, CEO of the e-tailer, informed company employees in a March 2 e-mail. B&N announced in October 2003 its plan to purchase all outstanding shares in the e-tailer and hoped to close the deal early in 2004.

B&N.com filed the proxy statement connected to the deal with the Securities & Exchange Commission on January 26, and Toulantis said that when the SEC responded to the statement in the last week of February it had some questions. "We are in the process of answering their questions," Toulantis wrote. She estimated that by the time the SEC approves the proxy and it is mailed to shareholders, a meeting to approve the merger won't be able to be held until late April. She assured B&N.com employees that after the merger "there will be no change in the way B&N.com operates."

Among the many numbers included in the proxy are the projected sales and earnings of B&N.com for the next five years. Forecasts assembled by B&N.com's investment banker Credit Suisse First Boston, based on the company's internal estimates, show sales growing 28% between 2003 and 2008, when revenue is projected to reach $544.9 million. EBITDA in 2008 will be $32 million, compared to negative EBITDA in 2003. Projections for 2004 call for a 5% sales increase and EBITDA of $500,000.

Credit Suisse also devised worst case and best case growth scenarios. Under the "increased competition" forecast, growth over the next five years would only amount to 14%, and EBITDA in 2008 would be $700,000. The "growth case" projections predict a 93% sales increase through 2008 when EBITDA would be $74 million.

The proxy also shows that when the purchase is completed, seven of the e-tailer's executives and directors will earn a total of almost $20 million from stock options. According to the documents, B&N.com chairman Len Riggio will take home net proceeds of $6.1 million, while CEO Marie Toulantis will earn $5.9 million. B&N.com vice chairman Steve Riggio will receive $4.3 million.

Others who will benefit from the sale include David Willen, CTO ($760,990); Kevin Frain, CFO ($757,340); David Gitow, chief marketing officer ($806,575); and Daniel Blackman, v-p, general manager, books, music & video ($618,728).

Projected B&N.com Sales
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