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Liberty Media bids $1bn for Barnes & Noble, shares rise more than 30%

Published: 13:43 20 May 2011 BST

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Media and entertainment group Liberty Media Corp (NASDAQ: LCAPA, LCAPB, LINTA, LINTB, LSTZA, LSTZB) said late Thursday that it has offered to acquire book retailer Barnes & Noble (NYSE:BKS), which put itself up for sale in August after pressure from a major shareholder.

The $17-per-share cash offer pushed shares of New York-based Barnes & Noble up by more than 30% in premarket trading on Friday, more than the 21% premium to the company's $14.11 closing price on Thursday.  The potential deal values the book seller at around $1.02 billion.

Barnes & Noble, and many companies like it, have been struggling to keep up with competition from online sites and discount shops, and have looked to devices like Kindles to boost sales. Liberty said in it statement on Thursday that Barnes & Noble is at the "forefront of the transition to digital".

In February, Michigan-based Borders Group - the US' second largest book chain - filed for Chapter 11 bankruptcy, and has since been closing a number of its stores.

Liberty said it expects to  take a 70% stake of Barnes & Noble through its proposed transaction and that its cash contribution toward the purchase price, depending on the amount of financing it can secure, would be in the range of $500 million.

The proposed deal remains subject to a number of conditions.

Liberty Media owns interests in a broad range of electronic retailing, media, communications and entertainment businesses through three publicly traded companies - the Liberty Interactive group (NASDAQ:LINTA, LINTB), the Liberty Starz Group (NASDAQ:LSTZA, LSTZB) and the Liberty Capital Group (NASDAQ:LCAPA, LCAPB). Through these companies, it holds stakes in Sirius XM Radio,  movie channel operator Starz, home shopping network QVC, and minority investments in Live Nation, Time Warner and Viacom.

Barnes & Noble shares rose more than 31% to $18.60 - above the offer price- before market opened on Friday, suggesting the market believes there is the potential for a superior bid.

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