Struggling bookseller Borders Group (NYSE: BGP) saw its shares rise 8% on Tuesday after the company announced that it had appointed 32-year old
McGuire succeeds Larry Pollock, who had indicated to Borders that he wanted to give up the role of chairman. He will remain as a director. According (subscription required) to The Wall Street Journal, "Pershing Square currently owns 10.6 million shares of Borders common stock, or 18% of the shares outstanding. If Pershing executes its 14.7 million warrants, it would own 25.3 million shares, or 33.6% of the total. Mr. McGuire, who had been a partner in Pershing Square when he joined the Borders board, is leaving Pershing Square to "pursue entrepreneurial interests."
It's sort of an interesting development for Borders: The company's market cap has slipped to just $40 million, and bankruptcy is considered by many to be a reasonably likely destination. The fact that Mr. McGuire is willing to deepen his relationship with the company would seem to suggest that there may yet be some hope for shareholders.
Still, it seems like a bad bet. The company's value has been butchered by bad management and change in the executive suite may have come too late.
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