The Faber Report

Barnes & Noble Unable to Reach Deal with Shareholder


Barnes & Noble released a statement saying, they were "unable to conclude an agreement on mutually acceptable terms" with one of its top investors, Ronald Burkle and his holding company Yucaipa, which specializes in private equity investments.

Barnes and Nobles

The world's largest bookseller was rumored to be in talks with Burkle, a shareholder who owns 19 percent of the company, by potentially giving him three board seats: two would have been independent and one would have been an Yucaipa member.

Lack of trust seems to be what led to the deal breaking down, according to people familiar with the matter.

If you remember, the billionaire Burkle filed a complaint with the Delaware Chancery Court in May in an attempt to get Barnes & Noble to rid its "poison pill" anti-takeover defense, which prevents anyone from taking more than a 20 percent stake without the board's approval.

Leo Strine, the Delaware vice chancellor, ruled on Thursday in favor of the bookseller and upheld the "poison pill," saying, "that the Rights Plan is not an unreasonable device."

At trial, according to Reuters, Burkle testified that Yucaipa had in October 2009 considered, but then decided against, pursuing a $25 per share buyout bid for Barnes & Noble. He considered it a "waste of time," given the Riggio family's effective control of 38.2 percent of the stock.

Last week, under pressure, Barnes & Noble announced that it intends to evaluate strategic alternatives, including a possible sale of of the company.

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*This post has been updated since it originally posted.

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