Liberty Media Corp, run by billionaire John Malone, has abandoned buying Barnes & Noble, but has bought a minority stake in the largest bookstore chain in the US, three months after it proposed acquiring the company for $1.02-billion.

Liberty, the Englewood, Colorado-based entertainment and e-commerce conglomerate, has invested $204 million by purchasing new preferred stock that can be converted into 12 million common shares.

The shares, which represent 16.6 per cent of Barnes & Noble stock, were purchased at $17 each.

The minority-stake deal will give Liberty two board seats to Barnes & Noble, which will be expanded to 11 members.

In May, Liberty made a $1.02-billion buyout offer for 70 per cent control of New York-based Barnes & Noble, 10 months after the world's largest bookseller had put itself for sale. (See: Barnes & Noble receives $1.02 billion buyout offer from Liberty Media Corp)

Liberty had offered Barnes & Noble $17-a-share in cash, valuing the company at $1.02 billion including $450 million debt. The offer represented a premium of 20 per cent to Barnes & Noble's closing stock price of $14.11 on 19 May, a day before Liberty made the offer.