New York City Los Angeles billionaire and business mogul Ron Burkle's Yucaipa Cos. has filed a complaint in Delaware court against Barnes & Noble, saying the retailer’s shareholder rights plan is unfair and directors have breached fiduciary duties, the Associated Press reported.
Burkle and his Yucaipa Cos. own about 19% of Barnes & Noble’s shares. Burkle sought to boost his stake without triggering the "poison pill" plan, but Barnes & Noble rejected that request in February. He has previously complained in regulatory filings and letters to the company about Barnes & Noble's shareholder rights plan limiting new stakes by a single investor.
In the complaint, Burkle's investment firm called the rights plan a "self-dealing scheme" designed to prevent Yucaipa or others from mounting an effective proxy battle. Burkle, who has said he thinks Barnes & Noble shares are undervalued, is seeking greater say in the company's direction.
Yucaipa is the chain’s second largest shareholder behind Leonard S. Riggio, the company's chairman, who holds a 29% stake. His brother Steve Riggio served as company CEO until March, when he was replaced by William Lynch. He remains vice chairman.
In the complaint, Yucaipa says the current shareholder rights plan "entrenches the Riggios and the other incumbent directors while depriving outside stockholders of the free exercise of the stockholder franchise." Yucaipa said it wants changes made to the shareholder rights plan to allow higher stakes by outside investors, as well as damages and expenses yet to be determined.
The complaint was filed Wednesday in the Court of Chancery of the State of Delaware.
In a statement, Barnes & Noble's board of directors called the complaint a "meritless lawsuit to advance [Burkle's] own self-serving agenda."
The statement said the shareholder rights plan was adopted last November in response to a "rapid accumulation of a significant portion of Barnes & Noble's outstanding common stock, and is intended to protect our shareholders from actions that are inconsistent with their best interests."
The company said it plans to submit the plan for shareholder ratification within a year of adoption.