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NEW YORK (

TheStreet

) --

Barnes & Noble

(BKS) - Get Barnes & Noble, Inc. Report

stock is soaring, after management announced that it is considering the sale of the company.

The book retailer, which has a $700 million market value, said its board will consider strategic alternatives for the company, which include a possible sale of the chain. "The board came to this decision based on the price of Barnes & Noble shares in the marketplace, which the board believes are now significantly undervalued," Barnes & Noble said in a statement.

The review process will be overseen by four independent directors.

Shares of the book retailer dropped 7.1% to close at $12.84, but are currently surging 26% in after-hours activity.

On the news

Borders

(BGP)

is gaining 9% in after the bell.

Speculation regarding potential buyers for Barnes & Noble has, in the past, focused on

Amazon

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(AMZN) - Get Amazon.com, Inc. Report

, which is competing with Barnes & Noble for dominance in the e-reader market.

More on Barnes & Noble Is the E-Reader Already Dead?

Microsoft

(MSFT) - Get Microsoft Corporation Report

, meanwhile, was also named as a potential Barnes & Noble buyer on CNBC's

Fast Money

.

Barnes & Noble's founder and biggest shareholder, Leonard Riggio, has also told the board he would consider being part of a wider investor group that could buy the company. "I fully support the Board's decision to evaluate strategic alternatives at this time," Riggio said in a statement. "Regardless of whether I participate in an investment group that buys the company, I, as well as the entire senior management team, am willing and eager to remain with the company and see it through the challenging years ahead."

There will, no doubt, also be eyes on activist investor Ron Burkle, who earlier this year opposed Barnes & Noble's "poison pill," which prevented him from upping his stake in the company without triggering the shareholder-rights plan.

Burkle currently has a 19% stake in the company and was looking to bolster his stake to 37%.

Barnes & Noble has been intently focused on its e-reader business. Last week the company said it would build a store within its store to house the Nook. The 1,000-square-foot boutique would have samples of the device, demonstration tables, video screens and have employees on hand to give customers advice and operating instructions.

Barnes & Noble ignited a price war with Amazon last month, when it slashed the price of the Nook to to $199 from $259 and said it would offer a basic Nook without 3G or Wi-Fi for $149. Only hours later, Amazon responded by slashing the price of the Kindle to $189 from $259.

Since then Amazon has gone even further, saying it will offer a Wi-Fi Kindle for $139, making it the lowest priced e-reader among big brands.

-- Reported by Jeanine Poggi in New York.

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