August 3, 2010 / 9:22 PM / 8 years ago

Barnes & Noble mulls sale

NEW YORK (Reuters) - Barnes & Noble (BKS.N), the world’s largest brick and mortar bookseller, said it is looking into selling itself, as its business suffers in the high-stakes battle for a leading role in the digital books market.

A view of the Barnes and Noble bookstore on the corner of Warren and Greenwich street in New York June 29, 2010. REUTERS/Lily Bowers

Barnes & Noble shares soared 27 percent. The company’s founder and top shareholder Leonard Riggio told the board he would consider being part of a wider investor group that could buy the company.

Billionaire investor Ron Burkle has also shown interest in the company, boosting his stake in recent months and suing the bookseller for preventing him from buying a controlling interest.

Forrester analyst James McQuivey said the potential bid by Riggio could signal that hard decisions needed to be made that would be more easily reached as a private company.

“They might feel they want to buy the company back now and take it public later and reap the windfall,” he said. “But there aren’t a lot of investors who will be that certain about the probable outcome of that bet.”

Barnes & Noble said it had formed a special committee of four independent directors to consider all options for increasing shareholder value.

It has come under increasing pressure from larger retail rivals including Amazon.com Inc (AMZN.O) and Wal-Mart Stores Inc (WMT.N) on book prices.

Its sales have also suffered as more readers turn to digital books on devices like Amazon’s Kindle and Apple Inc’s (AAPL.O) iPad, which are proving more popular than Barnes and Noble’s own Nook electronic reader.

Shares in the company surged to $16.35 after-hours from a close of $12.84. In the past year, Barnes & Noble’s share price has fallen by more than half. Its market capitalization was just over $813 million before it announced the possible sale.

Barnes & Noble said its special committee selected Lazard as financial advisor and Morris, Nichols, Arsht & Tunnell LLP as legal advisor.

Reporting by Michele Gershberg in New York and Alexandria Sage in San Francisco

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