As reported yesterday (CI No 3,533), Barnes & Noble Inc has agreed to buy the Ingram Book Group, a subsidiary of Ingram Industries Inc, for $200m cash and $400m in stock. What makes the deal dynamite is Ingram’s position as key wholesaler to its new owner’s bitter rival, Amazon.com Inc. Many independent bookstores rely on it as their sole source of supply, Amazon pointed out in a prepared statement. Even worse for Amazon and the other booksellers, publishing giant Bertelsmann recently took a 50% stake in Barnes & Noble. The combination of the country’s biggest publisher, book retailer and book wholesaler undoubtedly will raise industry-wide concern, Amazon said. An undaunted CEO Jeff Bezos told his customers not to worry: Goliath is always in range of a good slingshot, he quipped. Barnesandnoble.com rushed its own reply onto the wires: Well, Mr Bezos, what with a market capitalization of some $6bn and more than four million customers, we suppose you know a Goliath when you see one. Your company is now worth more that Barnes & Noble, Borders and all of the independent booksellers combined. Might we suggest that slingshots and potshots not be part of your arsenal. Amazon.com then issued a statement regarding barnesandnoble.com’s statement regarding Amazon.com’s statement about Barnes & Noble, Inc. It read: Oh. The central issue, however, is that the battle for control of bookselling in the United States is being fought between an overcapitalized internet upstart and an aspiring cartel. All but lost in the paper storm was the protest of the American Booksellers Association (ABA), which called the proposed acquisition: a devastating development that threatens the viability of competition in the book industry, and limits the diversity and availability of books to consumers. The ABA also wrote to Attorney General Janet Reno and to Robert Pitofsky, Chairman of the Federal Trade Commission, claiming that bookselling now faces the same anti-competitive environment now plaguing computer software (an area which Amazon also intends to enter): It is our understanding that the antitrust laws exist to protect consumers from exactly this kind of merger. We implore you to address this matter as expeditiously as possible. Barnes & Noble was infuriated by the ABA’s remarks, saying the acquisition would in fact dramatically improve Ingram’s service to independent booksellers. To suggest anything to the contrary is an attack on our integrity, as well as the good people who manage Ingram, the company sniffed.
