Tag Archive: follett

A Very Big Deal: B&N Acquires MBS

Barnes & Noble Education Acquires MBS Textbook Exchange: The Guru’s First Thoughts and a Little Background on the Deal

In less than a month of being the new Guru, I’ve already talked industry consolidation (Follett acquires Baker & Taylor) and touched upon Barnes & Noble Education’s stock woes. In today’s post about the B&N Edu $174.2 million acquisition of MBS Textbook Exchange, I combine the two.

A Bit of Background About the Deal

  1. B&N Edu and MBS have a long-standing sister-company relationship. B&N runs college bookstores and MBS does textbook fulfillment (B&N gets preferred used-book inventory). This relationship comes down to Len Riggio, who, even though now retired from B&N, holds a lot of B&N stock and is Chairman of the MBS Board and holder of 49% of MBS stock.
  2. B&N Edu is a leading campus bookstores retailer with a large physical and online presence. MBS is a leading textbook wholesaler, college-bookstore systems provider, and provider of 700+ direct school-associated online fulfillment for both colleges and K-12 institutions.

What we have in this acquisition is really just two connected, complementary companies becoming one. But what’s it all about?

In a nutshell, it’s about classic textbook vertical integration where the same company controls both the retail and wholesale market in order to drive efficiencies and reduce costs and redundancies, while also shortening the supply-to-sales chain, and empowering bookstores with tighter inventory control and pricing.

B&N has historically relied upon acquisition-and-consolidation has historically as its driving growth strategy. Since purchasing the company in 1971, B&N as guided by Riggio, has acquired bookstore chains, including:

  • Bookmasters
  • Supermart Books, which operated The Missouri Book Company (All retail stores sold to Barnes & Noble College Stores. Name changed to MBS Textbook Exchange, Inc. and company focused on textbook supply, store systems, and direct fulfillment.)
  • B. Dalton Bookseller
  • Doubleday Book Shops

B&N’s super-size retail presence was massive, and in addition to putting numerous independent bookstore out of business, it also took a toll on larger competitors:

  • Superstores: Borders — filed for Chapter 11 in 2011.
  • Mall stores: Waldenbooks — (owned by Borders) also defunct in 2011.
  • College bookstores: Follett and Nebraska — the former acquiring the latter in 2015 and then wholesaler Baker & Taylor in 2016.

The Missing Link Is Put Fully Into Place

B&N has had (and continues to have) a strong grip on retail bookselling. What they did not have prior to the acquisition of MBS was a wholesale book distribution operation. This absence, however, was not for lack of trying. In 1999, Barnes & Noble (the nation’s largest bookseller) announced its plans to buy Ingram Book Group (the nation’s largest book wholesaler). Within six months, B&N called off the $600-million deal as a result of the FTC stating intent to oppose the deal on grounds that it was “anti-competitive.”

And now B&N has finally filled that void. That B&N Edu acquired MBS Textbook Exchange less than one year after Follett acquired Baker & Taylor could not be less surprising or more timely. It is both a reaction to Follett taking ownership and control over the second-largest book supplier and an action that has been expected for decades and likely would have transpired regardless of Follett’s acquisition. Now that it’s happened, expect B&N stock to get a much-needed bump and for the B&N Edu vs. Follett fight for college bookstores to intensify.

Follett Names New COO

Follett Corp. Names George F. Coe (Baker & Taylor) As COO

Follett got its man as the college bookstore giant named George F. Coe (formerly of Baker & Taylor) its new COO. This is in no way unexpected as Follett continues its rapid consolidation of the college bookstore market. Take a look at what Follett has scooped up in terms of both retail and distribution in less than two years:

  • June 2015: Follett acquired Neebo, Nebraska Book Company’s retail division, adding 200+ college bookstores both on campus and off campus (not to mention Neebo.com).
  • April 2016: Follett acquired Baker and Taylor, thus taking control of the distribution side of academic bookselling.
  • February 2017: Follett names former B&T executive Coe as COO effective March 31, 2017.

Follett’s strategy of vertical integration makes sense in light of the necessity of competing against Amazon. Coupling its already significant college bookstore footprint with Neebo, in addition to buttressing its logistical back-end operations with the Baker & Taylor acquisition, gives Follet a strong bricks-and-mortar competitive advantage that is difficult to replicate. It remains to be seen whether this will be enough to withstand the Amazon juggernaut.

CAMEX RECAP – Rental, Digital, and Bankruptcy!

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Last week was the annual Campus Market Expo. The 2011 event was held in Houston, Texas, and while this show is for anything and everything college bookstores, the textbook industry favors the expo as a launching pad for new programs, training, and announcements, as well as a chance to set the stage for the August back-to-school season. So what’s the scoop on CAMEX 2011?  What was the buzz? What were the trends? And what were the expectations? Keep reading to find out.
Rental
Like general e-commerce, textbook rental was again center stage. In addition to the traditional CAMEX vendors, several online rental companies, including BookRenter.com, CampusBookRentals.com (through Bookstore Solutions), and Chegg, were present at the show. 

Surrounding the event were several important press releases regarding rental and the rental players:

  • BookRenter.com announced its partnership with NACS in order to position the move as uniting online rentals and bricks-and-mortar college stores as the ultimate source for affordable textbooks.
  • BookRenter also had a nice timely release on the company’s stability and immediate intentions as they announced raising a Series-C round of funding in the amount of  $40 million.
  • Chegg announced its partnership with the Independent College Bookstore Association in a new commitment to deliver affordable textbook rentals to campuses nationwide.
  • Follett announced a new online-rental solution for independent bookstores.

(more…)