NEW YORK (
shares spiked Friday after financier Bennett LeBow struck a deal to purchase a 15.5% stake in the troubled bookseller, overtaking
as its biggest shareholder.
LeBow will also become chairman of the board.
Under the deal, which gives Borders a much needed $25 million cash infusion, LeBow agreed to purchase 11.1 million shares for $2.25 each.
The deal is expected to close immediately. Borders will seek shareholder approval to issue to LeBow warrants that allow him to buy up to 35.1 million additional shares at the same price.
Borders shares were trading Friday afternoon at $2.36, up 5.8%, on volume of 1.5 million shares. Average daily turnover is about 3 million.
Ackman will see his stake in the company, which he owns through
Pershing Square Capital Management
, fall from 17.7% to 14.8% due to dilution. If LeBow is granted additional warrants, Ackman's stake could fall to just 9.9%. LeBow's interest, meawwhile, would grow to 43.3% on the warrants conversion.
Borders recently repaid a $42.5 million loan to Pershing Square and, in March, announced $790 million in new financing.
Reported by Jeanine Poggi in New York.
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