NEW YORK (Reuters) - Barnes & Noble Co lashed out against activist investor Ronald Burkle on Wednesday, saying the billionaire was trying to take over the bookseller through a proxy battle without rewarding shareholders.
"We believe Los Angeles-based investor Ronald Burkle is trying to take control of Barnes & Noble without paying you the premium you deserve for your shares," the company wrote in a letter to shareholders, calling Burkle's efforts a "scheme."
Burkle is running an alternate slate of three directors, including himself, for election to Barnes & Noble's board at the company's annual meeting on September 28. Burkle holds 18.8 percent of Barnes & Noble's shares, making him its second-largest shareholder.
Leonard Riggio, the bookstore chain's chairman and largest shareholder with a stake of 28.2 percent, is up for re-election and the company has nominated two outside executives alongside him.
Earlier this month, Barnes & Noble put itself up for sale. But the subsequent proxy battle with Burkle is seen as complicating or even derailing the sale process.
Barnes & Noble also asked shareholders to reject Burkle's proposal to increase the threshold of its anti-takeover "poison pill" to 30 percent from 20 percent. Barnes & Noble put the pill in place in November in response to Burkle's quick accumulation of shares.
In its "fight letter" to encourage shareholders to support the company-nominated directors, Barnes & Noble said Burkle may team up with another top investor, Aletheia Research & Management, to try to take control of the No. 1 U.S. bookstore chain without paying shareholders a premium.
In his decision two weeks ago to uphold Barnes & Noble's poison pill, a Delaware judge said Aletheia, which owns 15.1 percent of the retailer, would likely vote in tandem with Burkle's Yucaipa Companies investment firm.
Aletheia and Yucaipa hold a combined 33.9 percent of the company, according to Thomson Reuters data, roughly equivalent to the stake held by Riggio, his family and senior executives.
Barnes & Noble said Burkle and his proposed candidates were inexperienced and not qualified to be on the board. In addition to himself, Burkle nominated Stephen Bollenbach, chairman of KB Home
A spokesman for Yucaipa did not immediately respond to a request for comment.
Barnes & Noble on Tuesday reported a deeper-than-expected first-quarter loss as it incurred legal costs in its battle with Burkle and said the fight would hurt its full year results.
Shares were down 5 cents, or 0.3 percent, to $14.61 in morning trading.
(Reporting by Phil Wahba and Michele Gershberg, editing by Gerald E. McCormick)
