Barnes & Noble stock shot up 30 percent to $5.96 after the Journal reported a deal was imminent.
Now, Elliott is set to own the largest bookseller in the US, too.
Once the towering Goliath of the bookselling world, these days Barnes & Noble is getting dwarfed by primarily online competitors - particularly Amazon, which reportedly sells almost 50 percent of all new books.
Barnes & Noble tried (but mostly failed) to keep pace with Amazon.
Leonard Riggio, who is now Barnes & Nobles' founder and chairman, will step down after the acquisition.
Signage for a Barnes & Noble bookstore is displayed on the side of the store, January 10, 2019 in the Brooklyn borough of New York City.
Barnes & Noble shares were trading up 9.7 percent at $6.54 in Friday's pre-market session. Since then, Barnes & Noble has grown its website, launched an ereader called Nook to compete with rival stores and online retailers.
By 1993, Barnes & Noble was a publicly traded company that was upending the publishing industry.
Paul Singer's Elliott has made a bundle investing in bankrupt companies, usually by buying convertible bonds. Barnes & Noble, Inc. has a 1-year low of $4.11 and a 1-year high of $7.81. The deal now brings together the biggest booksellers in both the US and United Kingdom. Its $113 million of net debt, with a maturity date of 2023, is also manageable.
It is not known whether Barnes & Noble will adopt the Waterstones strategy of operating more like a large conglomerate of independent bookstores, but the combined company increases its footprint.
As for Barnes & Noble, there are probably benefits to managing its challenges away from the public eye. It'll be funded by a $700 million asset-based revolving credit facility from Wells Fargo Bank and Bank of America, as well as a $125 million first-in, last-out credit facility backed by a Carlyle Group credit unit, a Pathlight Capital fund and Wells Fargo, according to regulatory filings. But the deal also signals that a relatively cheap bid was more attractive than trying to regain the confidence of public market investors.
Tara Lachapelle is a Bloomberg Opinion columnist covering deals, Berkshire Hathaway Inc., media and telecommunications.