Barnes & Noble Needs a Novel Idea

NookBarnes & Noble (NYSE: $BKS) shares closed Friday up more than 5.% to $17.69.

Investors cheered the news that G Asset Management, a private equity firm has offered $22 per share for the struggling bookseller.

This news was confirmed by Barnes & Noble’s representatives.

It has also been reported that G Asset Management is interested in Barnes & Noble’s Nook division and has offered $5 per share for a 51% stake in that segment.

But I wouldn’t get carried away just yet.

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It doesn’t seem as if Barnes & Noble’s representatives believe that G Asset Management is serious with its offer. There are also questions whether G Asset Management can even come up with the money to close this deal.

G Asset Management certainly isn’t backing off. This is new offer is $2 per share more than their initial proposal last November.

The question is, what do they see in Barnes & Noble that the rest of the market does not?

Len Riggio, Barnes & Noble’s chairman, who owns close to 30% of the company’s stock, believes he can get a much sweeter deal than the one(s) currently on the table. He does not want to sell.

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I can’t say that I agree with him at this point – not when Nook sales took a nosedive of more than 60% this past holiday season compared to the year before.

That entire segment has been hurt by layoffs. Not to mention, the dominance to Apple‘s (NASDAQ: $AAPL) iPad and Amazon‘s (NASDAQ: $AMZN) Kindle devices.

It’s a mystery why anyone is willing to offer anything at this point Barnes & Noble.

On Wednesday, Barnes & Noble is due to report earnings, and according to John Tinker, Maxim Group analyst, he quarter could “prove to be a key inflection point.”

Next week will certainly be interesting. And suffice it to say, Barnes & Noble’s earnings report should make for a compelling read.

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