Barnes & Noble Education Shares Surged Tuesday: What Happened?

Barnes & Noble Education BNED shares rocketed higher on Tuesday, potentially driven by ongoing developments surrounding a potential strategic transaction with the company.

What’s Going On: At the beginning of the month, activist investors Outerbridge and Greenhaven delivered a preliminary $114.5 million recapitalization proposal to Barnes & Noble Education’s board.

The proposal included a $57 million rights offering backstopped by Outerbridge, Greenhaven and others, as well as a $57 million direct investment from eight investors at 35 cents per share. Greenhaven and Outerbridge would also have a "PIPE Capacity Option" to directly invest up to $20 million and $7.5 million, respectively, at their discretion.

The proposal outlined provisions like a 10% backstop fee payable in shares, board seats for Greenhaven representatives and the creation of an executive committee to manage a transition to a new CEO.

While the board determined on May 2 that the proposal could reasonably lead to a superior transaction, it did not deem the proposal officially superior. Outerbridge subsequently informed the company on May 6 that it did not intend to participate in further discussions around the proposal.

Last week, the company said in a filing that Greenhaven continues to explore a possible transaction and may continue to have discussions with management and members of the board.

Barnes & Noble Education shares are seeing elevated volatility and trading higher on Tuesday in possible reaction to the ongoing discussions. Barnes & Noble’s average session volume is about 3.3 million, according to Benzinga Pro. Tuesday’s trading volume was above 196 million at the time of writing.

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BNED Price Action: Barnes & Noble Education shares closed Tuesday up 72.6% at 53 cents, according to Benzinga Pro.

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