Liberty Media offer to buy Barnes & Noble

Publishers Lunch After an investigation of strategic options begun by Barnes & Noble's board last summer, today after the close of the market the company announced an offer from a prospective buyer. The special committee of the board charged with evaluating offers said that John Malone's Liberty Media has offered $17 per share in cash to acquire control of the company. But "the proposal states that it is contingent on the participation of founding chairman Leonard Riggio, both in terms of his continuing equity ownership and his continuing role in management." The committee says it "will evaluate this proposal" along with financial advisors Lazard Freres. Last October Riggio said he "remains open and flexible towards any solution which is good for all stockholders." At the time he reaffirmed, "...should an interested investor or group of investors desire me to be part of a group, I will consider such participation, and if I decide to participate with any investor or group, I will negotiate in good faith on matters of governance and control. It is not necessary for me to be the controlling shareholder of such a group." The announcement is preliminary--the company "cautions" that "the proposal from Liberty Media has not yet been evaluated by the special committee and its advisors." And they do "not intend to comment further regarding this proposal or the company’s evaluation of strategic alternatives, unless a specific transaction is recommended." But shares jumped in after-market trading on the news, rising almost 19 percent to 16.73 after closing regular trading at $14.11 per share. While it's a little premature, it's pretty clear the market believes this is the beginning of bidding for the bookseller, not the end, with the expectation of higher offers to come. (Barnes & Noble is heavily shorted as well, so an offer like this will drive the price up quickly as those shorts get covered.) Ron Burkle, the single largest holder of Barnes & Noble stock after Riggio with just under 20 percent of the company's shares, purchased most of that block at $20 a share and above. In testimony last July in his campaign to overturn the company's poison pill plan, Burkle had testified that he considered--but then decided against--making his own offer for the company at $25 a share. The stock has been on a roller-coaster of sentiment, rising to almost $19 a share in February as Borders was heading to bankruptcy, and crashing to historic lows of $8.77 a share less than two months later, before climbing back in May, helped by reports of a new ereader announcement for next week. (As previously disclosed, I bought shares back recently, and still hold most of those purchases.) Liberty Media is a conglomerate and investment vehicle which owns Starz and QVC and substantial online and ecommerce companies among other things.