Liberty Buys Barnes & Noble Stake

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Liberty Media said it has agreed to purchase $204 million of Barnes & Noble preferred stock, a deal which would eventually give it a 16.6 % stake and trumps a $1 billion bid the media giant had made for the troubled book retailer in May.
Liberty surprised the investment community in May with its $1 billion unsolicited bid for a 70% interest in B&N, a move that many analysts saw as a ploy to gain control of the retailer's electronic book business.
That offer, which was being evaluated by a special committee of B&N's board of directors, apparently lost some of its luster in subsequent months. As a result of the new investment, B&N said in a statement that both parties "have ceased discussions regarding Liberty's previously announced acquisition proposal."
The preferred stock transaction seems on the surface to be a good one for Liberty - the preferred interest is convertible into 12 million shares and comes with a 7.75% annual dividend.
"Their investment is a strong endorsement of our overall business and the additional capital will further fuel the explosive growth of our digital strategy," Barnes & Noble chairman Leonard Riggio said in a statement.
The investment also gives Liberty the right to elect two members to Barnes & Noble's board of directors. Liberty has said it would nominate CEO Greg Maffei and senior vice president Mark Carleton to the B&N board.
"We are excited about Barnes & Noble's prospects as the leading bookseller in the US and its growth opportunities in the digital world," Maffei said in a statement. "This investment provides Barnes & Noble with capital to grow its business on terms that are attractive for both parties and allows us to play a meaningful role in shaping their success to generate returns for our shareholders and theirs."