New York: Barnes & Noble Inc shares jumped 30 per cent on Friday in US trading to a higher price than a buyout offer by John Malone's Liberty Media Corp, suggesting investors are expecting an increased bid.
"There is a solid chance of an improved offer," Michael Souers, a retail equities analyst with Standard & Poor's who recommends holding the stock, wrote in a note.
Barnes & Noble, facing increasing competition as more consumers buy electronic readers such as Amazon.com Inc's Kindle, hired Lazard Ltd. last year to explore a sale. Barnes & Noble makes the Nook e-reader, and some potential bidders balked at a purchase because of how long it may take the chain to generate more digital sales, two people said last month.
"It's making a bet on an industry that is rapidly changing with every download being a vote against Barnes & Noble's business model for brick-and-mortar stores," said Brian Sozzi, a retail analyst for Wall Street Strategies in New York.
Growth drivers
"Every time somebody goes out and buys an iPad or a Kindle, Barnes & Noble's assets are depreciating."
A board committee will evaluate the proposal, which values the company at about $1 billion and is subject to an accord and to shareholder and regulatory approvals.
Liberty Media, controlled by billionaire Malone, holds stakes in the Starz Group media business, Sirius XM Radio Inc and HSN Inc the home-shopping retailer.
Mary Ellen Keating, a spokeswoman for New York-based Barnes & Noble, declined to comment beyond the statement. Courtnee Ulrich, a spokeswoman for Liberty Media, didn't return a call seeking comment.
Under Liberty's plan, Barnes & Noble Chairman Leonard Riggio would maintain his about 30 per cent equity stake and a management role in the company.
Liberty, based in Colorado, would own 70 per cent, it said in a separate statement. Liberty will contribute about $500 million in cash and finance the rest of its stake, it said.
In its statement, Liberty cited the bookseller's management team and transition to digital formats as drivers for growth.
The February bankruptcy of Michigan-based Borders Group Inc may reduce competition for Barnes & Noble. Borders, which plans to close about one-third of its stores, hasn't yet found a buyer, people with knowledge of the situation said on May 14. Barnes & Noble offered to buy about ten stores, they said.
- $1b: expected value of Barnes & Noble
- 30%: Riggio's expected share in firm if deal approved
