Barnes & Noble Inc said on Thursday that Liberty Media Corp, the conglomerate controlled by John Malone, has dropped its US$1 billion bid to buy the bookseller and instead will invest US$204 million in the company.
In May, Liberty Media offered to buy all of Barnes & Noble, apparently enticed by the potential of the company’s Nook electronic reader, but Barnes & Noble said the takeover talks had been ditched in light of the investment agreement unveiled on Thursday.
Under the terms of the deal, Liberty Media bought preferred stock convertible into about 12 million Barnes & Noble shares at US$17 apiece, giving it about a 17 percent stake in the company. The preferred shares will pay an annual dividend of 7.75 percent.
Liberty Media will also get two seats on the company’s board of directors, which is being expanded to 11 members. It has nominated Greg Maffei, its president and chief executive, and Mark Carleton, a senior vice president at the media company, to take the seats on Barnes & Noble’s board.
Barnes & Noble had put itself up for sale last year in response to pressure from billionaire activist shareholder Ron Burkle, but the company did not strike a deal. Burkle has since significantly trimmed his Barnes & Noble stake.
Barnes & Noble has struggled along with other traditional book sellers facing heightened competition from online retailers, such as Amazon.com, and discounters, such as Wal-Mart Stores Inc.
Chairman Leonard Riggio said the capital injection from Liberty Media would go toward expanding the company’s digital business.
Maffei said Liberty Media is “excited about Barnes & Noble’s prospects as the leading bookseller in the US and its growth opportunities in the digital world.”
Malone’s Liberty Media empire operates three publicly traded companies — Liberty Interactive Inc, Liberty Starz Group and Liberty Capital Group — through which it runs home-shopping network QVC and movie channel Starz. It also holds stakes in online, media and communications companies.
Some industry analysts have speculated that QVC could be used as a marketing vehicle for Barnes & Noble’s Nook.