Barnes& to Buy
John Mutter &Calvin Reid -- 9/18/00
Deal valued at about $64 million, 75% in B& stock

In the largest example so far of consolidation among online book retailers, Barnes& is buying The deal is valued at about $64 million, with 75% of that in B&N .com stock (at $4.25 a share) and the rest in cash. Under the terms of the deal, will become a wholly owned subsidiary of B& The deal is subject to regulatory approval and is expected to close in about 90 days. is the third-largest online bookseller in the U.S., specializing in professional and technical titles for the corporate market. B& is the second largest online book retailer; it is 40% owned by Barnes & Noble and 40% by Bertelsmann.

Fatbrain management, including president and CEO Dennis Capovilla and executive v-p, development, Kim Orumchian, will remain with the company. In a conference call announcing the merger, Steve Riggio, vice-chairman of B&N. com, described the deal as a "good strategic fit" that centered on Fatbrain's focus on the B2B document market and its digital-publishing ventures. "We can open more doors for Fatbrain's corporate document business," said Riggio, "and this makes B&'s general-interest book inventory available to Fatbrain's corporate customers."

The deal particularly highlights B&'s aggressive moves into the nascent e-publishing and print-on-demand market. B& already owns a 49% stake in print-on-demand subsidy publisher The online retailer recently launched an e-book superstore in conjunction with Microsoft and now, with the Fatbrain merger, B& will own more than half of MightyWords, the publisher and retailer of short, downloadable electronic material aimed at both the business document and consumer markets. spun off MightyWords as a separate company earlier this year (News, June 12) while retaining a 23% stake in the online publisher and retailer. B& already had a 30% stake in MightyWords and will also take Fatbrain's 23% investment.

In a related item, Fatbrain total revenues rose 106.8%, to $15.3 million, in the second quarter ended July 31, from $7.4 million in the same period a year ago. The net loss jumped 35.6%, to $8 million, from $5.9 million.