Barnes & Noble Shareholders Rubber-Stamp Poison Pill Measure When Barnes & Noble (BKS) enacted a poison pill measure that effectively prevented outside investors from amassing 20% or more of total company shares, it kicked off a long, acrimonious proxy fight by billionaire Ron Burkle to reverse the move -- and to find his way onto the board of the country's largest bookseller. But when Burkle's efforts were denied earlier this fall, and his hope to bump up his stake in the company from its current 18.8% to somewhere north of 30% was dashed, the yearlong drama more or less came to a resting point.

That made Wednesday's shareholders meeting to decide on the fate of the poison pill all but a formality. According to Reuters, founder, chairman, and newly re-elected board member Leonard Riggio announced that preliminary results showed 72% of the votes cast supported the poison pill, which will now stay in place for the next two years. Burkle and his company, Yucaipa Cos., did not solicit other shareholders to its position, deviating from his strategy before the previous meeting in September.

Beyond the fact that it blocks Burkle's ambitions, the provision has a few other effects. As the company outlined in a note to shareholders last month, Riggio -- who currently owns a roughly 30% stake in B&N -- can't accumulate any more shares. Nor can B&N grant any more shares to other Riggio family members (such as younger brother and former CEO Stephen.) And if anyone related to or connected to the Riggios
acquires additional shares by exercising options, they have to divest themselves of those options within 60 days. (In possibly unrelated news, Aletheia Research & Management, the No. 3 stakeholder, decreased its company holdings to just over 14%.)

With formalities dispensed of, there's a small matter of the company's immediate and long-term future. B&N effectively put itself up for sale last August, and after reports that approximately 20 entities had expressed interest, The Wall Street Journal says that today, the number of potential buyers has dropped to between eight and 10 strategic companies and private-equity firms. Its newest e-reader, NOOKColor, has been getting mostly favorable reviews, and has already started shipping in advance of its announced Nov. 19 launch date. B&N has also made a more serious move into the toys and games market, debuting 3,000-square foot stores-within-stores in the New York tri-state area. And the general buzz around e-readers for the holidays puts B&N in a positive mood, with its digital market share well in hand.

Optimism, however, hardly translates into certainty of results. In advance of its next quarterly filing on Nov. 30, analysts forecast that B&N will lose $0.39 per share this year, based on 60.2 million shares outstanding. And while Burkle may have been thwarted in his plan to up his share count, he also cannot be counted out -- especially if Leonard Riggio, as expected, figures prominently in the company's possible sale.


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akbhomesucks@activist.com

Proxy battles are one of shareholder activists' most powerful tools. Sometimes people appear to be activists, when in fact just the opposite is true (tea party issues). Burkle sees an opportunity to do a take over. For his own personal fortune gain. Most things Burkle touches gets turned into dodo. Burkle was lucky in the past, not so currently. Just Google Ron Burkle Sucks to see his track record as a Board Member at KB Home. KB Homes FTC Consent order is being violated with Burkle. Burkle has never answered any letters sent to him and these houses are not being fixed in a timely manner. Ignored for over 2 years?? Burkle is only timely when he could gain, not to service the bad Karma he is accruing. http://akbhomesucks.com

November 21 2010 at 3:45 PM Report abuse rate up rate down Reply