Billionaire Burkle Turns Up Heat on Barnes & Noble Takeover

February 4, 2010
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February 4 – February 11, 2010 Edition

Billionaire Burkle Turns Up Heat on Barnes & Noble Takeover

NEW YORK, NY/AUTHORLINK NEWS/02/04/10–Barnes & Noble stock prices rose 18 percent earlier this week after the bookseller’s largest outside shareholder, billionaire Ron Burkle, sought to waive a takeover prevention rule that, if overturned, would allow Burkle to acquire as much as 37 percent of the company-a share equal to the founding Riggio family’s ownership.

Burkle, sent a letter to Barnes & Noble’s directors January 28, asking whether the Riggios’ shares were excluded from the so-called poison pill takeover provision, according to a Bloomberg and other media reports. In short, if the Riggio’s can own 37%, then why not Burkle’s company, Yucaipa? Burkle filed the letter with the U.S. Securities and Exchange Commission February 1. If the Riggio family is excluded from the takeover provision, they would have an advantage in any proxy contest, according to Burkle.

The takeover prevention plan, which expires in about three years, gives shareholders the right to buy shares of new preferred stock if an investor increases its stake to more than 20 percent of Barnes & Noble’s common stock, or if an investor holding more than 20 percent buys more shares without board approval.

Founder Leonard Riggio and other family members, managers and directors, would have to approve Burkle’s takeover attempt. Barnes and Noble has for years been controlled by the Riggio family, who own over a third of its shares, and Leonard Riggio is the firm’s CEO. Burkle’s private-equity firm Yucaipa Cos., controls 19 percent of Barnes & Noble. Burkle’s reason for throwing the Riggio’s out appears to be that they have let Amazon become the dominate player in the online book business. Other retailers including Wal-Mart (WMT) have done well through e-commerce book sales, but Amazon has battered Barnes & Noble business.

Observers said it looks as if Burkle might want to take the company private, presumably at a higher price, and to acquire even more ownership.

Some observers say Burkle is more interested in Barnes & Noble’s underlying real estate holdings than in the book business.

Spokesmen for both Yucaipa and Barnes & Noble would not comment to media earlier this week.

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