Will Godzilla get together with Mothra to have a giant, two-headed love baby? That’s the speculation of some in the book biz yesterday, after reports like this Wall Street Journal story by Jeffrey A. Trachtenberg and Gina Chon, which began: “A major shareholder of Borders Group Inc. proposed that the bookseller acquire much bigger rival Barnes & Noble Inc., in a gamble to unite the two giant but struggling retailers at a time of major tumult in the book industry.”

As the report details, “A hedge fund managed by Borders investor William Ackman is now offering to finance a bid of $960 million in cash, or $16 per share, for Borders to buy the much bigger Barnes & Noble, which put itself up for sale in August. Mr. Ackman, whose Pershing Square Capital Management LP holds 37.3% of Borders shares, made his offer in a regulatory filing that became public Monday.”

It is, if you’ve been paying any attention at all to these two companies, it’s a strange development, to put it mildly. The far-smaller Borders has been rumored to be on the verge of going out of business for the last few years, and has closed numerous stores and laid off hundreds of employees — including completely gutting its executive corps — in its struggle to survive. B&N, meanwhile, while projecting a loss this year, is a much bigger company that has weathered the economic storm far better, and has had rapidly rising sales for its venture into e-book sales via its Nook E-Reader.

Still, as the WSJ report notes, it’s no coincidence that the story was floated yesterday, “when Google Inc. unveiled its new online bookstore, a retailing venture that adds a major player to a crowd of digital sellers that includes Amazon.com Inc. and Apple Inc.”

So what’s to gain? According to the WSJ: “A marriage of the two book behemoths could lead to some significant cost savings through economies of scale. Barnes & Noble also has proven to be a more adept operator, with skills that it could be applied throughout a single, combined chain. But a combination of the No. 1 and No. 2 bookstore chains in the U.S. would face headwinds, including antitrust scrutiny and Borders’ own shaky finances.”

One would think that the conglomerate publishers — despite being rumored to be propping up Borders — wouldn’t like to see two chains rolled into one, either, given the likelihood that it would lead to shrinkage of total stores as well as the kind of competition that sells books.

Time will tell. Meanwhile, the Journal reports the value of shares in both companies shot up at the news.