Is L.A. billionaire Ron Burkle taking a run at Barnes & Noble Inc.?
Burkle has dramatically upped his stake in the nation’s leading brick-and-mortar book retailer, more than doubling his stock holdings in recent weeks – and triggering talk of a possible takeover battle.
Burkle’s rapid-fire stock accumulation took off when his investment firm, Yucaipa Cos., bought more than 4 million shares valued at $94 million from Nov. 10-16.
Within 24 hours, Barnes & Noble’s directors passed a “poison pill” stockholder rights plan designed to thwart an unwelcome takeover attempt.
Barnes & Noble declined to comment and Yucaipa did not respond to interview requests, but investment analysts said Burkle likely won’t veer from his “activist” investor streak.
“There is no question that Ron is an activist investor who doesn’t have the intention of sitting on the sidelines and clipping coupons,” said Lloyd Greif, chief executive of L.A.-based middle-market investment firm Greif & Co. “He likes to be in control and exert his authority when he sees an opportunity, and I think that has Barnes & Noble afraid of him.”
Last week, Yucaipa reported in a Securities and Exchange Commission filing that it has acquired 10.2 million shares in the New York-based bookseller, giving it a nearly 18 percent stake. It was the second time this month Yucaipa announced it had upped its stake, which totaled only 8 percent earlier this year. In its first filings this month, Yucaipa stated that it bought the shares because they “represented an attractive opportunity.”
But, the filing also said Yucaipa is “concerned with the adequacy and enforcement” of Barnes & Noble’s corporate governance, particularly the Sept. 30 acquisition of Barnes & Noble College Booksellers, a former stand-alone company owned by Barnes & Noble founder and Chairman Leonard Riggio. College textbooks are expected to go digital in the near future, leading some to question the wisdom of the acquisition.
However, Burkle and any institutional investor allies would have difficulty shaking up Barnes & Noble, considering Riggio’s 30.8 percent stake. Also, Riggio’s brother, Steve, is chief executive, noted Ben Silverman, director of research at InsiderScore.com.
Still, the bookseller isn’t taking any risks, with the board approving the stockholder rights plan last week. The plan gives shareholders the right to purchase a new series of preferred stock. It kicks in if a person or investment group, without board approval, acquires 20 percent or more of Barnes & Noble’s common stock, or announces a tender offer that results in the ownership of 20 percent or more of Barnes & Noble’s common stock. The plan will expire in three years.
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