Borders Bankruptcy Puts Paid to Ackman Merger


William Ackman, founder of Pershing Square Capital Management LP, a hedge fund firm will likely be dealt a double blow by the bankruptcy of Borders Inc. As a major shareholder, he might see his stake in the bookstore chain wiped out and his proposed plan to merge Borders with Barnes & Noble is not likely to materialize.

In December last year, Ackman sought to help Borders purchase Barnes & Noble. But Barnes & Noble was not likely to agree to a merger because Borders did not have a strong presence in the digital reader market and desirable real estate. Now Borders has filed for bankruptcy last month and is set to close some 200 of its stores nationwide. This turn of events is likely to see Barnes & Noble gain a big proportion of the $550 million in book sales arising from the bankruptcy of Borders.

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