Borders Group Inc shares spiked more than 40 percent on Wednesday after its largest investor, William Ackman, said there was little likelihood the struggling bookseller would file for bankruptcy and could even be part of an industry consolidation.

Borders shares rose 41 cents to $1.35 in morning trading on the New York Stock Exchange, and had reached as high as $1.43 earlier in the session.

Ackman's Pershing Square Capital Management owns 17.7 percent of the No. 2 U.S. bricks-and-mortar bookseller.

He said the possibility that Borders would go bankrupt was a low probability event during an interview with cable business channel CNBC late on Tuesday.

Ackman also said that Borders could end up being involved in a consolidation in the bookselling industry, perhaps even with bigger rival Barnes & Noble Inc .

Borders has contended with sharply falling sales for about two years and its CEO quit last week after only a year at the helm. Comparable sales at Borders' namesake superstores fell 14.6 percent during the 11-week holiday period ended January 16.

Earlier this week, billionaire investor Ronald Burkle, whose Yucaipa Companies is one of Barnes & Noble's largest shareholders with an 18.7 percent stake, asked that company's board for permission to double his stake without tripping the poison pill provisions meant to thwart any hostile takeover.

Barnes & Noble shares were up 9 cents at $19.49 on the New York Stock Exchange.

(Reporting by Phil Wahba, editing by Dave Zimmerman)