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Borders and Barnes & Noble Might Merge

Now here's an interesting approach to the problems battering traditional booksellers--a merger of the sector's two behemoths, Borders and Barnes & Noble. Reports emerged yesterday that Bill Ackman, one of Borders' largest shareholders (he has also made a name for his investments in GGP, Target and J.C. Penney), has offered to finance a $960 million takeover of Barnes & Noble.

The thinking seems to be that a merger would allow the booksellers to benefit from economies of scale. Barnes & Noble's shares surged 29 percent when news of the potential acquisition reached the markets.

But some analysts question whether a merger would offer any permanent solutions to the booksellers' woes. The biggest threat facing bricks-and-mortar book chains today are e-readers and it's not yet clear how combining forces would help fight competition from Amazon.com, Google and Apple.

In any case, if Borders and Barnes & Noble do end up merging, there will likely be a major portfolio overhaul. We'd love to hear from all of you what you think of this proposal. Does a merger make sense? Will it help save Borders? What will be Bill Ackman's game plan if he ends up with the largest bookstore chain in the U.S?

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