New York City Barnes & Noble's board of directors has sent a letter to shareholders urging them to vote against proposals by Ron Burkle, the billionaire financier who is waging a proxy fight with the struggling book seller.
The retailer said in the letter Wednesday that accepting Burkle's slate of directors and other proposals made by his investment arm Yucaipa Cos. "would weaken shareholder protections." The moves would allow Burkle and another investor, Aletheia Research & Management, to take control of the company "without paying shareholders a premium."
The company's annual shareholder meeting is Sept. 28.
Burkle and Yucaipa, which has about a 19% stake in the company, unsuccessfully sued Barnes & Noble in a bid to expand their stake even more without triggering a shareholder rights plan. When that lawsuit was dismissed, Burkle said he would nominate a slate of three directors to the board.
In its letter, Barnes & Noble said Burkle's moves represent a "thinly veiled attempt to seize control of Barnes & Noble."
The company said Burkle is working in tandem with Aletheia, a Los Angeles area investment firm. The two companies have "a history of investing in many of the same companies at about the same time," the letter said, citing Whole Foods Market, Wild Oats and others.
"Burkle claims he is not working together with Aletheia to gain control of Barnes & Noble, but can you really believe that?," the letter said.
Barnes & Noble said together the two companies own about 35% of the book retailer, but if both get their way they would increase their stake to 30% each, which would control a majority of the company.