Borders Takes a Drag on Vector. -- Nicotine & Books -- The New Synergy

Borders Group (BGP) announced that Vector (VGR) will invest $25 million and effectively take defacto control of the board. Pershing Group is a willing bystander. Perhaps an enthusiastic bystander. Borders is the long suffering book seller who does not know what the next thing is. Vector is a cigarette manufacturer and probably has more cash than they know what to do with. They seem to have a 10% dividend yield. (Can we check that number again)

The following made transaction fees by being high priced advisors:

”Rothschild Inc. served as financial advisor to Borders Group and Jefferies & Company, Inc. served as financial advisor to Mr. LeBow. Baker & McKenzie LLP represented Borders Group and Latham & Watkins LLP represented Mr. LeBow. Jones Day advised the Board of Directors of Borders Group in connection with the transaction.

So what does a purveyor of nicotine want with a book retailer? What is the strategy? Is it only $25 million. Will the backroom operators pump up Borders in some fashion and use it as a disruptive tool. Should Amazon worry? Should shopping centers read their leases a little bit more clearly?

Why does nicotine want a book retailer?

Disclosure: No position in this stock