M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, March 24, 2011

BKS sale?

Bloomberg is reporting no sale for Barnes & Noble.   

Riggio, the largest shareholder, and the rest of the board began examining a possible sale under pressure from Ron Burkle, who began building a stake in the company in late 2008.

The board responded to Burkle’s stock purchases by introducing a so-called poison pill in November 2009 to limit his ownership to 20 percent. Yucaipa Cos., Burkle’s Los Angeles- based investment fund, sued to overturn the pill and lost.

Yucaipa then waged a proxy contest last year to add Burkle and two other candidates to the board, losing to Riggio’s slate. Yucaipa held almost 19 percent of Barnes & Noble as of October, compared with about 30 percent for Riggio, according to data compiled by Bloomberg.

The dispute between Yucaipa and the BKS board was the subject of litigation in Delaware last summer.  In that case, Ron Burkle 

claimi[ed] that the adoption of the pill, and the board's refusal to amend the pill per Burkle's specific suggestions, was a breach of the directors' fiduciary duties. As relief, Yucaipa argues that the pill's threshold as to Yucaipa should be increased to equal that applicable to Riggio, and that the pill trigger should be amended to allow Yucaipa to form a coalition with other investors to run a joint slate in a proxy contest this autumn. Yucaipa supports this request for relief with the argument that the pill was a disproportionate response to an illusory threat.

Here's the opinion in that case -- the court largely upheld the board's position.




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