Is There A Nook And A Crack In The Deal For Barnes & Noble?

Back in early May, Liberty Media

announced it had put an

to Barnes & Noble, Inc.

to buy 70% of the company, at $17 per share. Initially shares of Barnes & Noble spiked on the news, moving towards $20 per share, higher than the initial bid. Then some got to thinking. What in the heck was John Malone

It is still not ultimately known at this point what Liberty will do with Barnes & Noble, but some have speculated the stores could turned them into one-stop retail shops, selling everything that Liberty Medias has to offer, from Starz, to books, and other products. Another major problem has been the issue of financing, as it would cost $1 billion for the acquisition. According to the

Liberty has been working to get financing for the deal. The other 30% of the company is held by the founder of the company, Len Riggio, staying on with the company and holdings his stake. Both Riggio and Malone have expressed enthusiasm about working together. With the economy looking more and more like we are going into another recession, attracting financing for the deal could be harder to get than first thought. This is the reason negotiations are still ongoing. In my past experiences, when negotiations take much longer than expected, this is not a good sign for a deal getting done in its current form. There has also been concerns on how to properly value the Nook, Barnes & Noble's e-reader, which is showing tremendous growth. The popular e-reader has experienced tremendous growth, and has become a credible competitor to Amazon's

Kindle in the e-reader space. You can download wirelessly more than 2 million books in seconds. There are multiple kinds of Nooks, and some offer touch screen capabilities as well. Activist investor Ronald Burkle owns a 19.74% stake in the company and could potentially lead a rival bid to Liberty's, or defeat the offer if he feels it is too low. With equity markets plunging across the globe on renewed fears of a global recession, the potential collapse of Europe, and the disaster that is the political situation in Washington, it looks like there is a "Nook" or perhaps even a crack that is spreading in the deal. "Reading" this situation is still very hard at this point. Maybe go to your local Barnes & Noble to help you out.

Traders who believe that a deal will happen, albeit at a higher price might want to consider the following trades:

Traders who believe that financing will fall through may consider alternate positions: