A customer browses books at a Barnes & Noble Inc. store. (Paul Morris/Getty)
UPDATE, 4/4/14, 1:00 p.m. EDT: An additional Baker Botts attorney has been added to the firm’s deal team in the article’s penultimate paragraph.
Liberty Media has turned to longtime outside counsel Baker Botts for legal advice on the reduction of the company’s stake in top U.S. book retailer Barnes & Noble.
The bookseller announced Thursday that Liberty, which is run by billionaire and cable television pioneer John Malone, has decided to reduce its existing 17 percent Barnes & Noble stake to 2 percent through private sales to qualified institutional buyers, whose identities were not disclosed. The sale is expected to close by April 8.
Liberty, which acquired its shares in the bookseller through a $204 million investment in 2011, had previously considered buying a majority stake in Barnes & Noble via a proposed deal that would have valued the bookseller at $1.02 billion while leaving chairman Leonard Riggio with a 30 percent stake in the company he founded and Liberty with the remaining 70 percent share. Liberty ultimately backed out of the deal.
Barnes & Noble’s Wednesday closing price was $22.11 per share—a 30 percent premium over the $17 per share that Liberty paid in its initial investment. But the company’s stock price took a hit following Liberty’s announcement that it plans to shed most of its shares, dropping more than 13 percent Thursday afternoon. Despite seeing improvement in its core retail business in recent months, Barnes & Noble has seen its revenue decline in recent years largely as a result of its Nook e-reader devices’ failure to catch on with consumers. Reuters notes that Barnes & Noble’s Nook division saw sales drop 50 percent last quarter.
Liberty said Thursday that the share sale would give Barnes & Noble more freedom to explore strategic growth options. Once the sale is complete, Liberty will lose the right to keep two representatives on the Barnes & Noble board and the ability to block any asset sales.
Baker Botts, which previously represented Liberty in its proposed takeover bid for Barnes & Noble as well as the subsequent 2011 investment, is advising Liberty on the share sale with a team led by New York–based capital markets partner Renee Wilm and associate Brendan Dignan, along with associate Brittany Uthoff. Liberty’s deputy general counsel, Pamela Coe, led the company’s in-house legal team.
Earlier this year, Baker Botts represented Liberty on its proposed bid to buy the 48 percent of Sirius XM Holdings it does not already own in a deal that valued the satellite radio company at more than $10 billion. Liberty dropped that bid in March, opting instead to divide its cable and media assets into two distinct stock groups.