Riggio had previously expressed interest in buying Barnes & Noble but later withdrew.
According to the Financial Times, Elliott would offer $6.50 a share in a deal that values the chain at $476 million.
Very likely Barnes & Noble, with its almost 630 stores and Amazon always in the background, will need to shrink some more and keep tinkering with its merchandising, stores and engagement.More news: Mexican President offers "outstretched hand" to Trump after averting tariff war
Under the sale, Waterstones CEO James Daunt will take over as head of Barnes & Noble, leading both retailers and working out of NY. And prior to that there were years of management turnover, strategic misfires and lost sales as the last box book seller tried to hold off Amazon.
Elliot Advisors Limited, which owns Waterstones bookstores, will pay $6.50 per share, a 41% premium over B&N's Wednesday close. It acquired Waterstones, a United Kingdom book retailer, last year.
Elliott was careful to note that "each bookseller will operate independently" - but added that "they will share a common CEO and benefit from the sharing of best practice between the companies".
That model centered around CEO Daunt and his aggressive (for a business that had been pushed to the brink of extinction) expansion plan: open more stores. Daunt told The Wall Street Journal previous year, "Suddenly there is a lot more opportunity and Elliott can see that".More news: Afghanistan confident of Rashid Khan's recovery before South Africa clash
"Physical bookstores the world over face fearsome challenges from online and digital", Daunt said in the statement. "We meet these with investment and with all the more confidence for being able to draw on the unrivaled bookselling skills of these two great companies".
He said: "Our goal is to create, by investment and old-fashioned bookselling skill, bookshops good enough to be a pleasure in their own right and to have no equal as a place in which to choose a book". (NYSE:BKS) by 57.0% in the first quarter, according to the company in its most recent 13F filing with the SEC.
At 1250 BST, shares in the company were up 10.2% in pre-market trade at $6.57. That helped indexes rebound from losses last month, and some individual stocks saw even bigger gains due to company-specific news.More news: Protester arrested at Jeff Bezos Amazon conference in Vegas