Barnes & Noble, the US bookseller controlled by the Riggio family, has sent a letter to shareholders urging them to vote against proposals made by activist shareholder Ron Burkle.
In the letter, sent 9 September, the Barnes & Noble board asks shareholders to vote against both of Burkle's proposals at the annual general meeting on 28 September. It also attempts to outline how decisions taken by company management have increased shareholder value, contrary to Burkle's claims.
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%.
"Don't be fooled by Mr Burkle," the letter said. "We believe he is seeking to gain control of Barnes and Noble without paying full value."
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 his investment firm Yucaipa Companies, claims increasing this to 30% is not a threat to the company but will simply create a "level playing field".
In the letter, Barnes & Noble says that the purchase and later spin-off of GameStop added $3.8 billion of shareholder value over five years and highlights the other strategic measures the company has taken to increase shareholder value, including bringing on new executive leadership and nominating two new independent directors.
"We believe Burkle's agenda is self-serving and your board strongly urges you to reject his proposals," the letter said.
Burkle is attempting to instigate these changes 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 later this month at Barnes & Noble's annual general meeting when shareholders will vote on Burkle's proposals.
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