Share |

Battle intensifies between activist investor and Riggio family

Yucaipa Companies, the investment firm of activist shareholder Ron Burkle, has sent a letter to his fellow shareholders to "set facts straight on company performance" and dispute claims made by the Barnes & Noble board on 9 September. 

The letter, entitled "Enough with the fiction", accuses the Barnes & Noble board of attempting to "scare you with misleading statements about Yucaipa to distract you from the real issues."

The real issues, according to the Burkle letter, are that Barnes & Noble's profitability has been in steady decline for several years, the Riggio family has benefited from years of related party transactions and the board has not been active in fostering good corporate governance.

This letter is in response to one sent out by the Barnes & Noble board on 9 September, which asked shareholders to vote against proposals made by Burkle at the annual general meeting on 28 September. (Continue reading here)

Burkle is seeking to elect three independent directors to the board, including himself, and is attempting to increase the limit outside investors can take in the company to 30%.

Currently, the poison pill provision is set at 20%, which allows the founding Riggio family to remain as the company's largest shareholders with 34% of shares. Burkle, who owns 19% of the New York-based bookseller through Yucaipa, claims increasing this to 30% is not a threat to the company but will simply create a "level playing field". 

When contacted by Campden FB, a spokesperson for Barnes & Noble said: "We believe Mr Burkle's true objective is to gain control of the company without paying full value to all shareholders, and his campaign against the Riggio family is simply an attempt to distract shareholders and distort the facts.

"While Barnes & Noble is taking bold steps to create value for all shareholders, Mr Burkle has not offered a single idea, plan or strategy to build value for shareholders other than himself."

Yucaipa's letter said: "This board also continues to claim that we are trying to 'steal' the company. Aside from being completely untrue, these are pretty brazen charges." 

Burkle wants change as he is unhappy with the drop in Barnes & Noble share price, for which he blames the management of the founding family. His case is likely to have been strengthened by the company's most recent financial results, when Barnes & Noble reported a net loss of $63 million (€49 million) for the quarter ending 31 July. (Continue reading here)

The debate will come to a head on 28 September at Barnes & Noble's annual general meeting when shareholders will vote on Burkle's proposals. 

Want to get the latest family business/family office news direct to your desktop? Click here to register to receive our weekly newsletter

Are you a member of a multigenerational family business or family office? Click here to subscribe to our magazines

Click here >>