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Analyst Calls for Borders/B&N Merger

The Associated Press reports on an investors note sent out yesterday by Credit Suisse analyst Gary Balter that had share prices rising and people speculating. That’s because Balter suggested that bookseller Barnes & Noble should consider acquiring rival Borders. “Book retailing is an industry with very little if any growth as the Internet becomes the first source to answer most questions and offers books for lower prices,” he wrote. “Coupled with wholesalers such as Costco receiving better buying terms than the retailers, we believe a Barnes & Noble for Borders transaction would be approved and could create substantial back office synergies.”

Borders shares rose 65 cents, or 3 percent, to $22.56. The stock has traded between $16.20 and $24.19 in the past 52 weeks. Barnes & Noble shares rose 16 cents to $40.44, and neither piece of news is surprising as stock prices shift with any new bit of information. From a competition standpoint, a merger between the two major bookstore chains seems rather disastrous for publishers and authors as the fortunes of non-bestselling authors could be plunged even further into dire territory. For the chains, though, it might be a different story – especially if a merger prevents one, or both companies from dying on the vine, which is all too possible sooner than we think.

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