CNET también está disponible en español.

Ir a español

Don't show this again

Tech Industry

Barnes & Noble buys Babbage&#039s

    A computer game retailer owned by the boss of Barnes & Noble will be sold to the book company.

    After market close Wednesday, Barnes & Noble (NYSE: BKS) announced plans to buy game software retailer Babbage's Etc. for $189 million cash. Barnes & Noble will also assume $26 million in debt. If certain financial targets are met, Barnes & Noble will also pay $10 million each of the next two years.

    Leonard Riggio, chairman and CEO of Barnes & Noble, is the principal owner of Babbage's. The Barnes & Noble board formed a committee of independent directors to evalute the deal, the company said.

    Like rival Amazon.com, Barnes & Noble wants to expand beyond books into other fields such as music, video and other entertainment products. The console and PC games sold by Babbage's, which operates 495 stores and an online retail site. are "essential" to expanding the barnesandnoble.com website, said Alan Kahn, chief operating officer of Barnes & Noble.

    "We can expand this already fast-growing business at an accelerated pace," Kahn said. "The integration of the product mix of both companies affords additional opportunities for both revenue and bottom line growth." expects the deal to add 10 cents per share to earnings in the fourth quarter of this year.

    The price tag of $215 million total represents a bargain, in the view of Barnes & Noble, which said it's paying 5.1 times Babbage's estimated 1999 earnings before interest, taxes, depreciation and amortization. Babbage's nearest rival, Electronics Boutique, currently trades at roughly 10.8 times estimated 1999 EBITDA.

    Barnes & Noble will pay for the deal with money borrowed from an existing $850 million credit line.

    Shares of Barnes & Noble slipped 1/8 to 26 1/2 while Barnesandnoble.com (Nasdaq: BNBN) gained 1 1/8 to 23 1/4 in Wednesday's regular trading prior to the deal's announcement.>