Barnes & Noble (NYSE:BKS), the No.1 bricks and mortar bookseller, is looking at a buyout of No.2 player Borders (NYSE:BGP). Neither company has done especially well as readers have turned to Amazon (NASDAQ:AMZN) and other places to buy books online. While both of the book chains have web sales operations, they are not large enough to offset the trend to stay out of stores. Adding to their troubles is the fact that younger Americans do not read, perhaps because they don't know how.
According to The Wall Street Journal, "Barnes & Noble has about 20% to 22% of the retail book market, while Borders controls 10% to 12%." Since the companies are taking a shellacking from online rivals, The Justice Department may show them some mercy.
A merger won't solve any problems. It may allow for some management and distribution costs to be pulled out. Weak stores can be closed. But the market is wise. Over the last two years, Amazon's shares are up about 130%. BKS is off close to 20% and BGP is down closer to 70%.
