Liberty’s Malone Bets On B&N’s Digital Side, But It’s Not A Done Deal Yet

Liberty Media (NSDQ: LINTA) CEO John Malone finally broke his silence on the company’s possible acquisition of Barnes & Noble (NYSE: BKS) at the Allen & Co. conference in Sun Valley this week. He says he’s betting on the fact that Barnes & Noble could become a major competitor against Apple (NSDQ: AAPL) and Amazon.

The merger “would be a bit of a flier for us, on whether or not Barnes & Noble can play competitively with the likes of Apple and Amazon (NSDQ: AMZN) in the digital transformation. That’s really the bet,” Malone said, according to DealBook. He also spoke of the advantages of B&N’s brick-and-mortar stores: “We believe that publishers like the existing physical bookstores, they like having a partner in distribution who lives and dies in the book business as opposed to just commoditizing it, which these other players do. So I think you go into it with an edge in your relationship with the publishers.” Still, digital is “the only way for Liberty to play in this game.”

Liberty Media is in the process of conducting due diligence on Barnes & Noble, and Malone hadn’t said anything publicly about the purchase since first announcing it in May. Under the terms of the deal, Liberty would buy 70 percent of B&N at $17 a share if chairman Len Riggio, who holds 30 percent of the company, agrees to participate.

Riggio said he “couldn’t think of a better partner than John Malone and a finer group of executives than the team at Liberty,” in a statement through a spokesperson to the Wall Street Journal (NSDQ: NWS). The WSJ also noted that a deal could come together by the end of July–but, it said, Ron Burkle, B&N’s second-largest shareholder, could shake things up either by raising a ruckus about the offer being too low or by making his own counteroffer. Burkle has not commented publicly.

Meanwhile, in other bookstore chain news, last week Najafi Companies kicked off the court-supervised auction for bankrupt bookstore chain Borders last week with a bid of $215.1 million, plus the assumption of about $220 million worth of liabilities. A hearing on the deal is set for July 21, and if the court doesn’t accept it, Borders will liquidate. This week, the company reminded stockholders that their shares will soon be worthless.