Liberty Media’s long courtship of Barnes & Noble ended Thursday afternoon with the company agreeing to invest $204 million in the retailer through newly issued convertible preferred stock. The agreement fell far short of the much-discussed purchase of B&N by Liberty and it was unclear if all of B&N’s shareholders, most notably Ron Burkle, will be happy with the deal. The companies said the investment puts an end to Liberty’s acquisition proposal.
Under the terms of the investment, Liberty purchased preferred stock, convertible into approximately 12 million shares or 16.6% 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.
B&N chairman Len Riggio, who will continue to head the company, said the B&N will use the investment “to further fuel the explosive growth of our digital strategy.”
Liberty first offered to buy B&N for $17 per share in mid-May and at the time Riggio said he believed Liberty would make a good partner. One possible hurdle in reaching a deal for an acquisition was uncertainly in the debt markets which made financing difficult.
It was not immediate clear what synergies will be developed between B&N and Liberty. In a prepared statement, Greg Maffei, Liberty’s president and CEO, said: “We are excited about Barnes & Noble’s prospects as the leading bookseller in the US and its growth opportunities in the digital world. 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, Liberty will be entitled to elect two nominees to B&N’s board of directors, and. B&N has agreed to expand its board to 11 members. Maffei and Mark D. Carleton, senior v-p of Liberty, will be the two new B&N directors