Barnes & Noble eyes Borders

Barnes & Noble Inc. appears to be getting more serious about buying chief rival Borders Group Inc., confirming that it had put together a management team to study the feasibility of a combination.

The disclosure came as Barnes & Noble, the nation’s largest bookseller, reported a wider loss in its fiscal first quarter on a tax-related charge and lowered its sales guidance for the year.

Speculation had been mounting about a possible Barnes & Noble-Borders combination since Borders announced in March that it was putting itself up for sale and that it had lined up $42.5 million in financing to help it continue operations. At that time, Barnes & Noble said it would take a look at its rival.

Borders issued a statement Thursday saying the company was “in the midst of the strategic alternatives process and has not engaged in substantive discussions regarding any specific transaction to date.”

New York-based Barnes & Noble said it lost $2.22 million, or 4 cents a share, in the quarter ended May 3. That compares with a loss of $1.67 million, or 3 cents, a year earlier.

Excluding the charge, the bookseller would have earned 5 cents a share. The charge was related to an agreement with California to settle its long-standing dispute regarding the collection of taxes on sales made by Barnes & Noble.com from 1999 to 2005.

The company says revenue edged up to $1.16 billion in the fiscal first quarter, from $1.15 billion in the year-earlier period.

Analysts surveyed by Thomson Financial expected a profit of 5 cents a share on revenue of $1.17 billion. The estimates typically exclude one-time items.

Barnes & Noble’s shares fell 8 cents to $29.87. Borders stock rose 8 cents to $6.99.