Burkle aims to up Barnes & Noble stake; shares soar

NEW YORK (Reuters) - Billionaire investor Ronald Burkle is seeking permission from Barnes & Noble Inc (BKS.N) to nearly double his stake in the bookseller and become its largest shareholder without triggering a poison pill designed to avert a hostile takeover.

Barnes & Noble, the top bricks-and-mortar U.S. bookstore chain, said in a filing on Monday that Burkle's Yucaipa Companies LLC sent a letter to its board on January 28 seeking permission to raise its stake to up to 37 percent without tripping the pill's provisions, which go into effect once any investor exceeds 20 percent ownership.

Barnes & Noble shares rose $3.19, or 17.7 percent, to $21.19 in after hours trading. The company declined to comment beyond the filing and Yucaipa did not respond to requests for comment.

Barnes & Noble has been struggling with falling sales as more book buying migrates online to companies such as Amazon.com Inc (AMZN.O). Last month, the chain reported that sales at its stores open at least a year fell 5.4 percent in December.

Yucaipa bought 500,000 Barnes & Noble shares in January, raising its stake to 18.7 percent from 17.8 percent. It had earlier bought 5.7 million shares in quick succession in October and November, prompting Barnes & Noble's board, led by its founder, Chairman Leonard Riggio, in November to pass the poison pill.

A 37 percent stake would make Yucaipa the chain's largest shareholder, ahead of Leonard Riggio, who founded the retailer with a single bookstore in 1965. Riggio owned 16.9 million shares, or 29.4 percent, as of Sept 30, according to Thomson Reuters data.

The retailer's poison pill is designed to prevent hostile takeovers by allowing current shareholders to dilute the raider's holdings by purchasing more shares at a discount. It also allows existing Barnes & Noble shareholders to buy a buyer's shares at a steep discount in case of a takeover.

Barnes & Noble's poison pill gives shareholders the right to buy shares owned by the raider for half price, according to a November 18, 2009 regulatory filing.

Riggio's brother Stephen, who owns 72,086 shares, or 0.1 percent of the company, is Barnes & Noble's chief executive.

In Burkle's letter, he reiterated concerns about Barnes & Noble's corporate governance policies and enforcement, according a filing with the U.S. Securities and Exchange Commission.

He also asked the board to confirm that members of the Riggio family cannot collectively or individually buy any more shares without triggering the poison pill.

Last week, the Wall Street Journal reported that Burkle offered to invest at least $50 million for a controlling stake in luxury department store Barneys New York, citing people familiar with the situation.

(Reporting by Phil Wahba; editing by Gunna Dickson)