It was very interesting to read the speculative report this week that made a case for combining Barnes and Noble and Borders. In this world of consolidation and big is beautiful, it was intriguing insight into a city analyst’s thinking.
The speculation is based on the fact that Pershing Square Capital Management recently revealed in their currently stake holdings in both Borders and Barnes and Noble. The hedge fund is known for its activisim and recently successfully forced Wendy's into their restructuring plan that and also spined-off of Tim Horton's,
The report recognises that Barnes and Nobles and Borders Group are the number 1 and 2 US book stores and there would be obviously considerable cost savings in merging the two companies. Interestingly it also recognised that each company's online presence is still not competitive and that an combined unit may be stronger in this growing channel and present a much stronger competitive proposition to the likes of Amazon.
If we recognise and accept the potential growth of online physical bookselling and also the opportunity to supplement this with digital content then there must be logic in the combination. However if we address how the current channel could potentially offer a virtual one stop shop that incorporated all then we may find an alternative option. The hardest thing is getting competitors to collaborate and share a bigger pie.
