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Reports: Barnes & Noble to Settle With Investor Burkle

Thursday, 12 Aug 2010 08:34 AM

Barnes & Noble will settle a lawsuit filed by investor Ron Burkle so it can avoid a costly proxy fight and concentrate on selling off the company, according to news reports.

The book seller will add two independent directors to its board and assign another seat to Burkle's firm, Yucaipa, according to the Wall Street Journal citing people familiar with the situation. The New York Times reported that if there is no deal, Burkle could begin his proxy fight as early as Thursday morning.

The company had no comment early Thursday.

If the two sides do come to an agreement, Burkle, who increased his ownership stake last year to about 19 percent, would end his bid to gain more control over the book seller.

Burkle has challenged Barnes & Noble's poison pill strategy, which prevents anyone from taking more than a 20 percent stake in the company without board approval.

As part of the deal, Yucaipa would also support company efforts to sell itself — a decision the company announced last week. Yucaipa will be on the special committee overseeing the possible sale.

The papers said Barnes & Noble's board wanted to avoid a lengthy and costly proxy fight so its directors could examine a potential sale of the New York company. The sale may got to an investment group that would include the book seller's founder and biggest shareholder, Leonard Riggio.

Yucaipa would also support Riggio's re-election to the board, the Wall Street Journal said. Riggio, has a 30 percent stake in Barnes & Noble Inc., the only person with more shares than Burkle.

Barnes & Noble's share price has slid 24 percent since the beginning of the year and the company is struggling, along with other book retailers, as consumers pare down on purchases because of the economic downturn. Shoppers also are shifting away from paper books toward electronic books, much as they have done with music, moving away from CDs toward digital downloads. The company faces steep competition from Amazon.com and rival Borders Group Inc.

One of the independent directors under the deal would likely be Stephen Bollenbach, chairman of KB Home and former CEO of Hilton Hotels Corp. Barnes & Noble is also expected to eventually give up one director so the board would have 11 members.

The retailer would pay between $10 million and $15 million to cover Yucaipa's banking and legal fees, the paper said.

According to the reports, Burkle is also a potential buyer. Private-equity firms, including Blackstone Group, Apollo Management LP, Advent International, and others are likely to consider buying the company.

Barnes & Noble's annual shareholder meeting is scheduled for Sept. 30.

Shares of Barnes & Noble slipped 3 cents to $14.45 in premarket trading Thursday.

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Barnes Noble will settle a lawsuit filed by investor Ron Burkle so it can avoid a costly proxy fight and concentrate on selling off the company, according to news reports.The book seller will add two independent directors to its board and assign another seat to Burkle's...
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