NEW YORK — Bookseller Borders Group Inc. hopes to redefine itself with a new $25 million investment from financier Bennett LeBow, who will become its chairman and biggest shareholder.
In an era of deep discounts on printed books and growing consumer appetite for electronic ones, the struggling company will use the infusion it announced Friday to strengthen its balance sheet and invest in its online business.
“As an astute investor and business operator with a strong technology background and proven experience with driving company turnarounds, (LeBow) will play an extremely important role in helping us redefine the Borders brand that is so critical to unlocking a turnaround,” Mike Edwards, Borders interim president and chief executive, said in a statement.
Borders, the nation’s No. 2 traditional bookseller behind Barnes & Noble Inc., has cut staff and other costs and closed stores as it faces increasing competition from discounters and online sellers such as Inc.
Borders’ fourth-quarter net income soared as a result of the cuts, but its revenue fell 13 percent as book sales plunged, according to results announced in March. The company plans to report on its first quarter Thursday.
It’s also playing catch up on the e-book front and has just started taking orders for its Kobo electronic book reader.
LeBow, chairman of tobacco holding company Vector Group Ltd., is buying 11.1 million shares at $2.25 apiece, the company said.
The transaction gives LeBow a 15.5 percent stake in Borders, more than activist shareholder William Ackman, the billionaire leader of Pershing Square Capital Management LP. LeBow could claim a stake of 35 percent through a warrants issue, Borders said.
Borders, based in Ann Arbor, Mich., said Pershing Square supports the deal with LeBow.
