Is Barnes and Noble an Unusual Acquisition for Liberty Media?

Liberty Media (NASDAQ:LSTZA) offered to acquire Barnes & Noble (NYSE:BKS) this Thursday for $1.02 billion. The deal came as a surprise to many who questioned why a new-age media conglomerate such as Liberty would be interested in the nation’s largest book chain. Nonetheless, even the prospect of an agreement led Barnes & Noble stock to jump 30% last Friday, closing on Monday at $18.59 per share.

Liberty’s desire for this agreement likely has to do with the Nook, the Barnes & Noble e-book reader. While Barnes & Noble retailers have faced numerous difficulties over the years, the Nook has been successful. Currently, Barnes & Noble controls 25 percent of the e-book market, the second biggest share next to Amazon’s (NASDAQ:AMZN) Kindle, the industry leader, and iBooks for Apple’s (NASDAQ:AAPL) iPad and iPhone. Liberty’s investment could further propel the success of the reader. Beyond the potential of the Nook, Barnes & Noble’s most significant competition, Borders (NYSE:BGP), filed for Chapter 11 bankruptcy in February. As a result, Barnes & Noble’s retailing outlets will have an added advantage moving forward.

This would not be the first time that Liberty took on a struggling asset. In 2009, Liberty invested $530 million in Sirius XM (NASDAQ:SIRI) radio, a company that was on the verge of bankruptcy at the time. Since then, Sirius has recovered considerably, last year posting their first quarterly profits since 2008. The funding and resources that an acquisition would allow Barnes & Noble (NYSE:BKS)could benefit the company considerably, although the $17 per share Liberty is currently offering B&N may be a bit too low for them to accept just yet.

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