Wall Street Journal
By Russell Adams and Jeffrey A. Trachtenberg
John Malone's Liberty Media Corp. made an offer Thursday to acquire Barnes & Noble Inc. for $1.02 billion, a dramatic turn for the nation's largest bookstore chain—which put itself up for sale last summer but struggled to find a buyer as the outlook for traditional booksellers soured.
The proposed deal represents a 20% premium over Barnes & Noble's share price in 4 p.m. New York Stock Exchange trading Thursday. The bookseller's shares jumped 24% in after-hours trading to $17.50, topping the $17-a-share bid from Mr. Malone's empire.
The offer, which would also include the assumption of about $450 million in debt, represents a bold foray by Liberty into a new segment of the entertainment business. Liberty owns interests in a wide range of electronic retail, media and communications ventures, though its biggest business is the home-shopping-network QVC.
"Barnes & Noble is the established leader in bookselling and is at the forefront of the transition to digital, with a management team that has demonstrated expertise in operations and positioned the company for growth in a dynamic marketplace," Liberty said in a statement late Thursday.
Liberty's proposal will be structured as a merger and give its Liberty Capital group equity ownership of about 70% of Barnes & Noble, Liberty said in the statement. Liberty said it expects its cash contribution will be around $500 million, "depending on the amount of financing that can be obtained."
The bookseller said a special committee of the board of directors hasn't evaluated the proposal yet. Barnes & Noble and Liberty said the proposal is contingent on the participation of the retailer's 70-year-old chairman, Leonard Riggio, "both in terms of his continuing equity ownership and his continuing role in management." It's unlikely that a bid by Liberty would have been made without the approval of Mr. Riggio, who is also the retailer's largest investor.
A spokesperson for Liberty wasn't immediately available for comment. A spokeswoman for Barnes & Noble said she couldn't comment beyond the press release.
Brick-and-mortar booksellers like Barnes & Noble have struggled with competition from Internet retailers like Amazon.com Inc. and the advent of digital books and e-readers. Barnes & Noble has responded by offering a line of Nook e-readers in an attempt to lure readers who are rapidly going digital. The retailer is expected to unveil a new e-reading device Tuesday.
The company put itself on the block last August under pressure from investor Ronald Burkle. Liberty's bid comes just a few months after Borders Group Inc., the nation's second-largest bookstore chain, filed for Chapter 11 bankruptcy protection.
Liberty Media is known for doing deals for financial reasons rather than an interest in operating the businesses. In recent years, it has purchased stakes in businesses in order to later spin them off. In 2009, it invested $530 million in Sirius XM Radio Inc. in exchange for stock and board seats, which kept the satellite-radio operator out of bankruptcy. Sirius later turned around its business, and Liberty's 40% stake in the company is now worth $3.5 billion.
For Mr. Riggio, the offer appears to crown a career that stretches back to 1965, when he opened the Student Book Exchange in Greenwich Village. Six years later, he bought Barnes & Noble, then a single-story establishment on Manhattan's Fifth Avenue. Several years ago, Mr. Riggio rejected overtures from activist investor William Ackman to merge Barnes & Noble with Borders.
