* Says he aims for control without paying a premium
* Says Burkle and his candidates not qualified
* Company says Burkle may team up with investor Aletheia
* Yucaipa says not seeking control of Barnes & Noble
* Shares up 4.4 percent
(Adds Yucaipa statement, updates share activity)
By Phil Wahba
NEW YORK, Aug 25 Barnes & Noble Co (BKS.N) said
activist investor Ronald Burkle was unqualified to sit on its
board and accused the billionaire of trying to take over the
bookseller without rewarding shareholders.
Burkle launched a proxy battle to put three directors on
Barnes & Noble's board shortly after the leading U.S. bookstore
chain put itself up for sale. The company's chairman and top
shareholder Leonard Riggio is trying to organize a bid.
"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's board of
directors wrote in a letter to shareholders on Wednesday,
calling Burkle's efforts a "scheme."
Burkle is running an alternate slate of directors,
including himself, for election to Barnes & Noble's board at
the company's annual meeting on Sept. 28. His Yucaipa
investment firm holds 18.8 percent of Barnes & Noble's shares,
making him its second-largest shareholder.
In the letter, which urged 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.
"This is nothing more than a thinly-veiled effort by Barnes
& Noble to deflect criticism of this board's failures," Yucaipa
said in an emailed statement, adding that Aletheia's investment
in Barnes & Noble is "completely independent" of its own.
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 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.
Barnes & Noble shares were up 4.4 percent at $15.30 in
afternoon trading on the New York Stock Exchange.
WAR OF WORDS
Burkle built his fortune through a series of West Coast
grocery store buyouts. He has faulted Barnes & Noble's
management, citing the roughly 40 percent decline in its
shares' value in the past year, and accused Riggio of packing
the board with relatives and cronies.
In addition to himself, Burkle nominated Stephen
Bollenbach, chairman of KB Home (KBH.N) and a former Hilton
Hotels Corp CEO and Time Warner (TWX.N) board member; and
Michael McQuary, CEO of Wheego Electric Cars Inc.
Barnes & Noble questioned Burkle's competence, saying in
Wednesday's letter that Burkle and his proposed directors had
been part of "some of the most spectacular technology and
corporate failures in history."
The company blamed Burkle for being part of the Yahoo
(YHOO.O) board that rejected Microsoft Corp's (MSFT.O) 2008
acquisition bid. It also faulted Bollenbach's role in the 2000
merger between America Online and Time Warner, calling it
"possibly the worst" deal ever.
"Do not let Burkle destroy Barnes & Noble," the company
In its statement, Yucaipa said the background and
experience of its proposed directors "speak for themselves."
Last week, Barnes & Noble nominated David Golden, a partner
in investment firm Revolution LLC, and David Wilson, chief
executive of the nonprofit organization that runs the Graduate
Management Admission Test, saying they would add "significant
technology and financial experience."
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. [ID:nN24243498] It has also been contending with years
of declines in physical book sales.
(Reporting by Phil Wahba; additional reporting by Michele
Gershberg, editing by Gerald E. McCormick, Dave Zimmerman and