8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

January 17, 2008
(Date of Report; Date of Earliest Event Reported)

BORDERS GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)

Michigan	1-13740	38-3294588
(State or Other Jurisdiction of	(Commission File Number)	(IRS Employer Identification
Incorporation)		Number)
100 Phoenix Drive, Ann Arbor, MI 48108
(Address of Principal Executive Offices)
734-477-1100
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))

ITEM 5.02.   DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

        Effective January 17, 2008, the Board Of Directors of Borders Group, Inc. (the “Company”) appointed Richard “Mick” McGuire to the Company’s Board of Directors. McGuire is currently a partner at Pershing Square Capital Management, L.P. (“Pershing Square”). Pershing Square owns approximately 18 percent of the common stock of Borders (excluding economic interests held through total return swap agreements). On January 17, 2008, the Company issued a press release announcing McGuire’s appointment. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

        In connection with McGuire’s appointment to the Company’s Board, the Company and McGuire, on behalf of himself and Pershing Square, entered into a letter agreement (the “Letter Agreement”) setting forth certain undertakings by each of McGuire and Pershing Square for the benefit of the Company, including, among other things, with respect to certain confidentiality and regulatory issues. In addition, the Letter Agreement provides that for so long as McGuire serves on the Board, and for two weeks after any resignation by McGuire, Pershing Square will not cross the 20% beneficial ownership threshold (as beneficial ownership is defined in Rule 13d-3 of the Securities Exchange Act of 1934) with respect to the Company’s common stock (other than as a result of Company share repurchases) except after two weeks’ prior notice to the Company. This summary of the Letter Ag reement is qualified in its entirety by reference to the Letter Agreement, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

ITEM 5.03.   AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGES IN FISCAL YEAR

        On and effective as of January 17, 2007, the Board of Directors adopted the Fourth Amendment to the restated By-Laws of the Company. The purpose of the Fourth Amendment was to provide that Special Meetings of Stockholders, for any purpose or purposes, may be called by the Chief Executive Officer or by the Board of Directors acting pursuant to a resolution adopted by a majority of the entire Board of Directors, and shall be called by the Secretary upon the request of the holders of at least twenty-five percent (25%) of the shares of the Corporation outstanding and entitled to vote at the meeting. A copy of the Fourth Amendment to the Restated By-Laws of the Company is attached hereto as Exhibit 3.7 and is incorporated herein by reference.

ITEM 9.01.   FINANCIAL STATEMENTS AND EXHIBITS

(d)
Exhibit No.	Description
3.7	Fourth Amendment to the Restated By-Laws of Borders Group, Inc.
99.1	Press Release, dated January 17, 2008
99.2	Letter Agreement among and between Borders Group, Inc. and Richard McGuire
	(on behalf of himself and Pershing Square Capital Management, L.P.)

SIGNATURE

                 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Borders Group, Inc.
	(Registrant)
Dated: January 18, 2008	By: /s/ Edward W. Wilhelm
	Edward W. Wilhelm
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description
3.7	Fourth Amendment to the Restated By-Laws of Borders Group, Inc.
99.1	Press Release, dated January 17, 2008
99.2	Letter Agreement among and between Borders Group, Inc. and Richard McGuire
	(on behalf of himself and Pershing Square Capital Management, L.P.)

EX-3.7

FOURTH AMENDMENT
TO
THE RESTATED BY-LAWS
OF
BORDERS GROUP, INC.

     1. Section 3 of Article II of the Restated By Laws of the Company is amended to read as follows:

     SECTION 3. Special Meetings. Unless otherwise prescribed by law or by the Articles of Incorporation, Special Meetings of Stockholders, for any purpose or purposes, may be called by the Chief Executive Officer or by the Board of Directors acting pursuant to a resolution adopted by a majority of the entire Board of Directors, and shall be called by the Secretary upon the request of the holders of at least twenty-five percent (25%) of the shares of the Corporation outstanding and entitled to vote at the meeting. Any request for a special meeting of the shareholders shall set forth: (A) a statement of the specific proposal to be brought before the meeting and any material interest in the matter to be acted upon of any of the stockholders requesting the meeting; (B) the name and address of the stockholder(s) who is requesting the meeting; and (C) the number of shares of the Corporation’s stock which are owned by each such shareholder. If any of the stockholders requesting the meeting is not a registered holder, such stockholder(s) must submit to the Secretary of the Corporation, at the time of submission of the request, a written statement or statements from the record holder of the shares verifying that such stockholder(s) is the holder of the applicable shares. Written notice of a Special Meeting stating the place, date and time of the meeting and the purpose or purposes for which the meeting is called shall be shall be given not less than 10 days nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting.

EX-99.1

Borders Group Names Mick McGuire to Board of Directors

Contact:
Anne Roman
734-477-1392
aroman@bordersgroupinc.com

ANN ARBOR, Mich., Jan. 17, 2008 — Borders Group, Inc. (NYSE: BGP) today announced that Richard “Mick” McGuire has been appointed to the company’s Board of Directors, effective today. McGuire is a partner of Pershing Square Capital Management, L.P.

McGuire joined Pershing Square in 2005 and is one of five senior professionals responsible for managing approximately $6 billion in investor capital, a role that includes evaluating, initiating and monitoring investments across a wide range of industries including, among others, retail, consumer, business services and financial services. Prior to Pershing Square, he held positions at private equity funds J.H. Whitney & Co., and Stonington Partners, Inc. McGuire holds a masters degree in business administration (MBA) from Harvard Business School and a bachelors degree from Princeton University.

“Mick brings substantial expertise, financial sophistication and fresh insights to the Borders Group Board,” said Chief Executive Officer George Jones. “We are pleased to welcome him and look forward to benefiting from his involvement. His addition, and our recent election of Mike Archbold, strengthen the Borders Group Board, reflecting our continued determination to pursue the best interests of our stockholders.”

“I am optimistic about the future of Borders and look forward to working with the Board and the management team as the company executes its strategic turnaround plan,” McGuire said. “The company has many near and long-term opportunities. The plan is a sound strategic roadmap and I’m pleased to be part of a process designed to deliver value for all shareholders over the long-term.”

-more-

McGuire Appointed to Borders Group Board—2

Pershing Square Capital Management, L.P. owns approximately 18 percent of the common stock of Borders (excluding economic interests held through total return swap agreements).

About Borders Group, Inc.

Headquartered in Ann Arbor, Mich., Borders Group, Inc. is a $4.1 billion global retailer of books, music, movies, periodicals, and gift and stationery items. Through its subsidiaries, Borders Group employs more than 30,000 and operates over 1,100 stores worldwide primarily under the Borders(R) and Waldenbooks(R) brand names. Borders superstores carry up to 200,000 titles, and customers enjoy a comfortable shopping experience, as well as a host of popular events and community-centered activities when they visit their local Borders store. For more information about Borders Group, visit www.bordersgroupinc.com.

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. One can identify these forward-looking statements by the use of words such as "projects," "expect," "estimated," "look toward," "going forward," "continuing," "planning," "returning," "guidance," "goal," "will," "may," "intend," "anticipate," and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address matters such as the company's future financial performance (including earnings per share growth, EBIT margins and inventory turns, liquidity, same-store sales growth, and anticipated capital expenditures and depreciation and amortization amounts), its strategic plans and expected financing and benefits relating to such plans (including steps to be taken to improve the performance of domestic s uperstores, the exploration of strategic alternatives with respect to certain international operations, the downsizing of the Waldenbooks Specialty Retail Segment and the development of a proprietary Web site) and its intentions with respect to dividend payments and share repurchases. This release contains discussion of our results on an operating basis, which does not include all adjustments required per U.S. generally accepted accounting principles.

These statements are subject to risks and uncertainties that could cause actual results and plans to differ materially from those included in the company's forward-looking statements. These risks and uncertainties include, but are not limited to, consumer demand for the company's products, particularly during the holiday season, which is believed to be related to general economic and geopolitical conditions, competition and other factors; the availability of adequate capital to fund the company’s operations and to carry out its strategic plans; the performance of the company’s information technology systems and the development of improvements to the systems necessary to implement the company's strategic plan, and, with respect to the exploration of strategic alternatives for certain international operations, the ability to attract interested third parties.

The company’s periodic reports filed from time to time with the Securities and Exchange Commission contain more detailed discussions of these and other risk factors that could cause actual results and plans to differ materially from those included in the forward-looking statements, and those discussions are incorporated herein by reference. The company does not undertake any obligation to update forward-looking statements.

###

EX-99.2

January 17, 2008

Borders Group, Inc.
100 Phoenix Drive
Ann Arbor, MI 48108
Attention:	Mr. George Jones
	President and CEO

Dear George:

     I am delighted to join the Borders Group, Inc. (“Borders”) board, and I look forward to making a contribution to the company.

     This letter, intended solely for the benefit of Borders, contains a series of undertakings by myself, my firm and the investment funds that we advise (collectively, “Pershing Square” or “we”). These undertakings will be effective while I am a Borders director, and are intended to be legally binding on Pershing Square (which I am authorized to bind) and to address various issues that we have discussed.

     We are sensitive to Borders’ concerns regarding confidentiality and other regulatory issues, and feel that it would be appropriate to restrict ourselves as set forth in this letter in order to address those considerations. To that end, I hereby undertake, consistent with my fiduciary duties to Borders, (i) not to serve, and Pershing Square agrees not to designate any of its personnel (including, for that purpose, consultants compensated by Pershing Square), as an officer or director of any bookseller competitor of Borders, and (ii) to refrain from communicating to anyone (whether to any company in which we have an investment or otherwise) outside of the five individuals in addition to myself on Pershing Square’s Investment Team, Pershing Square’s chief legal officer and Pershing Square’s chief compliance officer confidential information I learn in my capacity as a director of Borders; provided that Pershing Square shall (and shall cause its personnel to) be bound by the same confidentiality restrictions that apply to me. In addition, this letter memorializes that, subject to applicable law, all of Pershing Square’s personnel have agreed to maintain the confidentiality of Borders’ nonpublic information they obtain through my service on the Borders board and not to trade in Borders securities in violation of law while in possession of such nonpublic material information.

     In addition, if either Borders or Pershing Square (the “notifying party”) determines in good faith that your election of me to the Borders board of directors, or my serving as such a director, either alone or in conjunction with other matters, causes the notifying party’s outside

Borders Group, Inc.
January 17, 2008 
Page 2 of 3

counsel to conclude in writing that as a result of such election, service and other matters that either Borders or Pershing Square or both of Borders and Pershing Square is (or are) or will likely be in violation of the antitrust laws, then the notifying party will inform the other party of such opinion and determination together with the basis for such opinion and determination in reasonable detail. In such event, such other party will consult with its outside counsel. If such other party determines that such a violation of law exists as to it, or if the notifying party determines that such violation of law exists as to such notifying party, then Borders and/or Pershing Square, as the case may be, shall take commercially reasonable steps to address such violation of law by it. Moreover, either party may determine, even if it has not determined that a violation of law exists, that circumstances are such that action is appropriate to add ress such circumstances, in which case such party may take such steps as it deems appropriate to address such circumstances. This is without limitation to any other rights or remedies a party shall have.

     Furthermore, we agree that, for so long as I serve on the Borders board, I will comply with the policies (as applied to me on a reasonable and good faith basis) applicable generally to directors of Borders as currently in effect (together with changes to such policies imposed on a reasonable and good faith basis), and Pershing Square will not engage in the purchase or sale of Borders securities during Borders blackout periods under the restriction calendar currently in effect, together with changes to such calendar or unscheduled blackout periods (in either case imposed on a reasonable and good faith basis). Borders shall not be responsible for compliance by Pershing Square or me with the securities laws, including regulations relating to insider trading.

     Further, we agree that: (i) for so long as I serve on the Borders board (and, if I resign from the Borders board, for two weeks after written notice of such resignation), Pershing Square will not cross the 20% beneficial ownership threshold (as beneficial ownership is defined in Rule 13d-3 of the Securities Exchange Act of 1934) with respect to Borders common stock (other than as a result of Company share repurchases) unless we give Borders two weeks’ prior notice that we intend to do so (and we agree that if we breach this agreement, we will as promptly as reasonably practicable divest Borders common stock to again comply with such 20% beneficial ownership threshold and will not vote any Borders common stock in excess of such 20% ownership threshold until we do so, these remedies being specifically enforceable and in addition to any other remedies available to Borders in respect of such breach); and ( ii) if Pershing Square disposes of its interests in Borders such that it ceases to own at least 5% of the outstanding common stock of Borders, I will offer my resignation to the Borders board.

Borders Group, Inc.
January 17, 2008
Page 3 of 3

                            I look forward to working together with you and the board. 

                                                                                         Very truly yours, 

                                                                                         /s/ Richard T. Mcguire, III

                                                                                         Richard T. Mcguire, III 

AGREED: 

BORDERS GROUP, INC. 

By: /s/ George Jones 

      Name:  George Jones

      Title:  President and CEO