NEW YORK - Investor Ron Burkle accused Barnes & Noble Inc's board of putting the interests of its controlling family over those of other shareholders when it blocked his attempt to double his stake in the U.S. bookstore chain, according to a regulatory filing on Thursday.
Burkle wants to meet board members who are not Barnes & Noble executives to discuss the company's poison pill provision, which was put in place in November to thwart hostile takeover attempts.
Last month, Burkle asked the board for permission to double his stake in Barnes & Noble without triggering the poison pill provision, which goes into effect once any single investor's stake rises above 20 percent. Burkle's investment firm Yucaipa Cos owns 18.7 percent of Barnes & Noble.
The board voted unanimously last week not to waive the poison pill provision.
I am disappointed by your rejection of my request that Yucaipa be allowed to acquire the same level of share ownership as the Riggio family is allowed, Burkle wrote in a letter to the board dated Feb. 25 and filed with the U.S. Securities and Exchange Commission.
A Barnes & Noble spokeswoman declined to comment on the letter. Burkle did not respond to a request for comment on what he plans to do next.
The poison pill is designed to prevent hostile takeovers by allowing current shareholders to dilute the buyer's holdings by purchasing more shares at a discount.
It also allows existing Barnes & Noble shareholders to buy the investor's shares at a steep discount in the event of a takeover.
Burkle has faulted the company's governance. He also has criticized the manner in which it bought Barnes & Noble College Booksellers for $514 million last year from its founder and Chairman Leonard Riggio. Riggio also Barnes & Noble's largest individual shareholder.
Riggio and his brother, Barnes & Noble Chief Executive Stephen Riggio, and other company insiders own about 31 percent of the company's shares.
Burkle in his letter asked whether the Riggio family can collectively own at least half of Barnes & Noble's shares without triggering the pill, a question he said the board had left unanswered in its reply to him last week. Burkle has asked this question before.
In addition to the Riggio brothers, the board has seven members, including William Dillard, CEO of department store chain Dillard's Inc.
The company has said it would put the poison pill up for a shareholder vote within 12 months of its adoption. Burkle argued that the Riggios should not be able to vote due to a clear conflict of interest.
Earlier this week, the bookseller reported weaker sales at its stores during its most recent quarter, though it said electronic books were selling well.
Barnes & Noble shares were up 2 cents to to $20.20 in midday trading on the New York Stock Exchange. (Reporting by Phil Wahba. Editing by Robert MacMillan)