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Liberty Media offers $1 bln for 70 pct of Barnes & Noble

Barnes & Noble

Media conglomerate Liberty Media—which has stakes in things like Starz, QVC, Sirius, and Expedia—has offered Barnes & Noble $17 per share for a 70 percent stake in the company. The offer translates to about $1 billion, and if approved would effectively mean Liberty Media would take over the bookseller, although Liberty Media plans to structure the transaction as a merger. Liberty Media’s price represents a 20 percent premium on Barnes & Noble’s recent closing price.

“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 Media said in a statement.

The offer is contingent upon Barnes & Noble founding chairman Leonard Riggio staying with the company, both in terms of keeping his managerial role in the company as well as maintaining his own equity stake. Liberty Media estimates about half ($500 million) of the acquisition would be financed in cash.

Liberty Media’s offer to take over Barnes & Noble comes as the bookseller ramps up its competition with Amazon in the digital books market: Amazon is now selling more digital books than physical books and Barnes & Noble has been making a serious play in the electronic books market with its Nook ereaders—the company recently claimed to have 25 percent of the electronic book market in the United States. However, unlike Amazon Barnes & Noble also has a significant retail business and has been watching its profits decline from over $150 million for the fiscal year that ended in early 2007 to just $36.7 million last year. And times are tough for bookstores: Barnes & Noble competitor Borders recently filed for bankruptcy protection.

So far, Barnes & Noble has said only that they will evaluate the offer.