Liberty Media Puts $204M into Barnes & Noble

Liberty Media will pour $204 million into bookseller Barnes & Noble Inc., forgoing earlier plans to buy the company outright. Under the terms of the deal, Liberty will buy 12 million shares – or 16.6% of the company – at a price of $17 per share. The deal comes three months after Liberty offered to buy 70% of the bookseller. Facing pressure from some shareholders, Barnes & Noble put itself up for sale last summer but failed to find a buyer until Liberty stepped up to the plate.

PRESS RELEASE
Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today announced that Liberty Media has invested an aggregate of $204 million in the Company through the purchase of newly issued convertible preferred stock.

Under the terms of the strategic investment, Liberty purchased preferred stock, convertible into approximately 12 million shares or 16.6% (after giving effect to the issuance) of the Company’s common stock at a price of $17 per share, and with a dividend rate of 7.75% per annum to be paid quarterly. The investment, which was approved by Barnes & Noble’s board of directors following a recommendation made by its Special Committee, closed today. In light of Liberty’s investment, the parties have ceased discussions regarding Liberty’s previously announced acquisition proposal.

Leonard Riggio, Chairman of Barnes & Noble said, “We could not have found a better strategic investor than Liberty Media. Their investment is a strong endorsement of our overall business and the additional capital will further fuel the explosive growth of our digital strategy.”

“We are excited about Barnes & Noble’s prospects as the leading bookseller in the US and its growth opportunities in the digital world,” said Greg Maffei, Liberty Media’s President and CEO. “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.”

Following expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Liberty will be entitled to elect two nominees to the Company’s board of directors. Barnes & Noble has agreed to expand its board to eleven members and both parties have agreed that Liberty’s two nominees to the Company’s board of directors will be Gregory B. Maffei, President and Chief Executive Officer of Liberty and Mark D. Carleton, Senior Vice President of Liberty.

The convertible preferred stock will also be entitled to vote on matters submitted to the Company’s shareholders on an as-converted basis following the later of the expiration of the waiting period and the completion of the Company’s 2011 annual meeting of shareholders.

The Company will file the investment agreement and associated terms of the preferred stock on a Current Report on Form 8-K to which investors should refer for additional detail on the terms of the preferred stock and the investment.

About Barnes & Noble, Inc.
Barnes & Noble, Inc. (NYSE:BKS), the world’s largest bookseller and a Fortune 500 company, operates 705 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 636 college bookstores serving over 4.6 million students and faculty members at colleges and universities across the United States. Barnes & Noble conducts its online business through Barnes & Noble.com (www.bn.com), one of the Web’s largest e-commerce sites, which also features more than two million titles in its NOOK Bookstore(TM) (www.bn.com/ebooks). Through Barnes & Noble’s NOOK(TM) eReading product offering, customers can buy and read eBooks on the widest range of platforms, including NOOK eBook Readers, devices from partner companies, and hundreds of the most popular mobile and computing devices using free NOOK software.

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