Amazon & Borders: Bill Ackman Stokes Fire

Business Week reported that Ackman said "Amazon could buy the company for about $400 million to get those locations that would take more than $1 billion to build," he told reporters on the sidelines of a conference in New York. "You have to think of it like how Apple (AAPL) has retail stores across the country."

Now let's just ignore the repeated use of his name as Ackerman. Does anyone really think Ackman would agree to sell the company for a loss? Really?

What is more likely is the $400 million price figure is as accurate as the name they gave him. Either it is a misprint or a reporter error. Bill Ackman will not sell for a loss. If that was the plan, why not sell now and make more $$? Think about it.

Now the justification of an Amazon (AMZN) buy makes sense.

One reason that might persuade Amazon is that the company may soon lose its state tax advantage across the nation. Some 18 states are ramping up to require e-commerce businesses to collect sales tax, and about 1,100 online retailers have already volunteered to collect them.

Ackerman said that once Amazon loses its tax advantage that buying retail locations will make sense. He believes customers will benefit from getting same-day delivery that a network of retail stores can provide, and Amazon would also get an opportunity to sell other products not currently carried at Border's locations. [According to BW]

This makes sense. But, Ackman is more likely just trying to remind Barnes & Noble (BKS) that there will likely be other bidders for the company and that they ought not to delay the process too long. He is also most likely publicly letting them know what the potential competition from Amazon in Borders locations would be without implicitly making the threat.

Everyone just take a breath...

Disclosure: Long BGP