A war is currently on in the e-reader/e-book business and it seems no one is safe from the firing lines. Not even those who can be described with such superlatives like the biggest, the largest, the best, etc. And the latest casualty seems to the number one book store chain in the United States, Barnes & Noble. According to the latest e-reader news, they have put themself up for grabs. With economy yet to reach the pink of its health and competition continuing to be relentless, this seemed to be the most obvious decision on part of Barnes & Noble. That the consumer preference has shifted towards e-books is another reason behind the move as Barnes & Noble sources revealed they wish to apply themselves more in the e-book business.
The Los Angeles billionaire Ron Burkle and a major shareholder in the company (19 percent) welcomed the move and said he would bid along with a group of investors to eventually increase his share to 37 percent.
The company’s principal stockholder and Chairman Leonard Riggio with an almost 30 percent stake in the bookstore business also expressed his desire to purchase the company along with a group of investors.
“I, as well as the entire senior management team, am willing and eager to remain with the company and see it through the challenging years ahead,” announced Leonard Riggio in a statement.
Leonard Riggio has long been at loggerheads with Ron Burkle over effective control and management of the company.
However, Riggio’s move to acquire a majority stake in the company is likely to face stiff competition amid accusations of the company favoring a sweetheart deal or a conflict of interest.
“Any transaction with an insider is going to be inherently suspicious and will be closely scrutinized,” said Ryan Thomas who belongs to Nashville law firm Bass Berry & Sims’.
Barnes & Noble shares soared 25 per cent on the back of the news of the impending sale, its highest rise in a decade.
The move to sell the book store seemed imminent as the company reported larger losses in June, which some believe is the outcome of the huge investment made in developing the Nook e-reader, which though seems to have been recently outgunned by the Kindle.
However, the company is foreseeing a surge in profits from the sale of e-books and believes its online e-book store can take on the likes of the Amazon and Apple’s iBook store. Barnes & Noble Chief Executive William Lynch recently said that the company currently holds a 20 percent share of the world e-book market. He further expressed optimism that holding on to the current position could translate to sales of $3 billion to $5 billion by 2013.