Dissecting the Liberty, Founder Bid for Barnes and Noble

The $17 a share bid from Liberty Media for Barnes and Noble may not be enough for a market that has sent shares of the bookseller well above it, but it is the only bid that’s emerged for the company since it put itself up for sale nine months ago and perhaps most importantly it includes the participation of Barnes and Noble’s founder and chairman Len Riggio.

Barnes and Nobles
Barnes and Nobles

Riggio was given permission by Barnes and Noble’s board to speak with Liberty months ago, according to people close to the situation.

Now, Riggio has decided to partner with Liberty in its bid and will roll his 30 percent ownership stake along with a $150 million note into the deal.

It remains to be seen how the special committee of Barnes and Noble’s board of directors will react to the bid. The company’s business is in the midst of the painful transition from the retail sale of books to the digital sale of those books.

As that transition plays out over the next 18 months to two years, the question will be whether the digital efforts of the company will prove robust enough to stem the decline in the physical sale of books.

It’s not the easiest of transitions to manage and one has to believe that doing so as a private company in the stable of John Malone’s Liberty would be a preferable way to handle it rather than remaining public.

While there may be no shortage of theories as to how Liberty can integrate Barnes and Noble into its various digital businesses, the likelihood at this point is that such efforts are secondary to the primary goal of helping it manage the digital transition, while perhaps rationalizing some of its real estate.

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