DETROIT — Borders Group Inc. stock soared 43 percent yesterday, a marked rebound from the record low it hit last week after the bookseller said it was putting itself up for sale.

Investors drove up shares $2.18 to close at $7.25 on the New York Stock Exchange. On Thursday, Borders stock fell to an all-time low of $3.97 a share before closing at $5.07.

Borders suspended dividends last week and arranged $42.5 million in financing at 12.5 percent interest from its largest shareholder, Pershing Square Capital Management LP. Pershing Square made an offer to buy Borders' remaining international business for $125 million and has a warrant to buy nearly 20 percent of Borders shares at $7 a share for 7 1/2 years.

Alyce Lomax, a senior analyst at the Motley Fool, said investors may have been influenced by the Pershing Square warrants.

"Maybe that made people think the stock got too beaten down last week," Lomax said.

Analysts call Barnes & Noble the most likely suitor. One analyst noted that even if Barnes & Noble doesn't buy Borders, it will be easier to compete as Borders slows investment in its stores.

Matthew Fassler, managing director of Goldman Sachs in New York, cut his target share price for Borders Group to $6.50 from $12 yesterday.

Borders faces increasing competition from online retailers such as Amazon.com and from mass merchants like Wal-Mart and Target. It plans to launch its new e-commerce site by May 3 after breaking with Amazon.com last year.

Fassler expects Barnes & Noble to acquire Borders Group over time or benefit from Borders' liquidity crisis.

A merger between the nation's two largest booksellers could be a challenge, Fassler wrote in a research report yesterday. He noted as stumbling blocks antitrust concerns and limited savings from a merger of the two. Superstores cannot buy at lower prices than independents after a 2001 lawsuit settlement, and that limits economies of scale, he said.

Fassler wrote that while Barnes & Noble has stronger numbers than Borders, "it appears as though its biggest financial edge is in lower rents relative to sales, which cannot be exported to an acquisition."

Still, a combination of the two could result in double-digit earnings per share gains for Barnes & Noble in an all-cash deal, he wrote.

Borders is in the midst of a turnaround effort. This year, the chain is rolling out concept stores that have digital centers for downloading music and books, and it's setting up strategic partnerships with online companies.

For 2007, Borders reported total sales of $3.8 billion, up from $3.6 billion the year before. It had a net loss of $157.4 million for the year, compared with a loss of $151.3 million in 2006.

Borders hired JPMorgan Securities and Merrill Lynch & Co. to advise it on strategic alternatives such as selling the company or certain divisions.