May 23, 2011

Everyone at B&N stores accross the nation pounding their chests and engaging in Tarzan-like yodeling


Barnes & Nobel's fiscal year

Lots of chatter over the weekend about why gazillionaire Liberty Media-owner John Malone would offer $1 billion for Barnes & Nobel, a company that many were giving not too much longer to live, let alone thrive.

A Wall Street Journal story from Friday says the deal was “consistent with the modus operandi of Liberty’s chairman and controlling shareholder, John Malone, who has made a fortune, in part, by investing in companies left for dead by many investors, only to prove they have life left.”

A Bloomberg News report from Saturday speculates that the deal “may have little to do with integrating the bookseller into his other businesses. Instead, he may simply see an opportunity to profit by lending support to an out-of-favor company, much like fellow billionaire Warren Buffett … Like Buffett, who built Omaha, Nebraska-based Berkshire Hathaway Inc. with a mix of businesses picked for their individual merit rather than combined synergies, Malone is increasingly taking advantage of independent, value plays on businesses where he sees opportunity ….”

A New York Times post from Saturday agrees: “An acquisition of Barnes & Noble may mirror Liberty’s earlier investment in Sirius XM Radio. In 2009, the satellite radio company was on the precipice of bankruptcy, burdened by debt. Liberty made a $530 million investment, in exchange for preferred shares. Early last year, Sirius recorded its first quarterly profit since the 2008 merger of Sirius Satellite Radio and XM Radio.”

And a USA Today story from yesterday say, well, whatever his reasoning, Malone already looks like a genius — his offer, plus B&N’s planned announcement of a new e-reader Tuesday, have led to a terrific jump in the company’s stock, with shares rising 30% Friday to $18.33 per share — well over Malone’s offer of $17 per share.

A report on Seeking Alpha, meanwhile, reminds us it was just an offer, not a completed deal … and there may be more to come. From whom, you may ask? Keep an eye on Google, Sears, Amazon, and Microsoft, says Alpha.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives