NEW YORK (Reuters) - Bookseller Barnes & Noble Inc is in talks with Ronald Burkle's investment firm to end the billionaire's lawsuit and avoid a potential fight over the company's board, The New York Times said on Wednesday, citing people familiar with the matter.
A settlement is expected to be announced soon, and calls for Barnes & Noble to add two independent directors and a director affiliated with Burkle's Yucaipa Cos to its board, the Wall Street Journal said.
The news came a week after Barnes & Noble, the largest U.S. bookstore owner, put itself up for sale, drawing interest from several private equity firms.
Burkle's investment firm Yucaipa Cos recently owned 19.6 percent of Barnes & Noble stock.
The billionaire had sued in Delaware Chancery Court to void the New York-based company's "poison pill" that he said entrenches the founding Riggio family, and makes it harder for him to buy more stock or mount an effective proxy contest.
According to the newspapers, Barnes & Noble and Burkle are discussing whether to add as many as three directors to the nine-person board. The Journal said that under an accord, Barnes & Noble will eventually give up one director.
In exchange, the Times said, Burkle would withdraw the lawsuit, agree not to start a proxy fight, and support the company's director candidates in 2010 and 2011.
According to the Journal, one independent director expected to be added is Stephen Bollenbach, a former Hilton Hotels chief executive who is now chairman of KB Home
At the trial, Burkle testified that Yucaipa had in October 2009 considered, but then decided against, pursuing a $25 per share buyout bid for Barnes & Noble. He said he considered that a "waste of time," given the Riggio family's effective control of 38.2 percent of the stock.
Leo Strine, the Delaware vice chancellor, is expected to rule soon in the case.
Barnes & Noble and Yucaipa did not return requests for comment. Both declined to comment to the Journal. Mary Ellen Keating, a spokeswoman for Barnes & Noble, and Frank Quintero, a spokesman for Yucaipa, declined to comment to the Times.
Shares of Barnes & Noble closed Wednesday down 50 cents at $14.48 on the New York Stock Exchange.
(Reporting by Jonathan Stempel in New York; Editing by Muralikumar Anantharaman)
