Yucaipa requests that Barnes & Noble's poison pill be declared invalid. According to Yucaipa, Barnes & Noble's largest shareholders, the Riggio family (including Barnes & Noble's chairman Leonard Riggio), intended to entrench their control of the corporation and had used Barnes & Noble as a "personal piggy bank."
Mr. Burkle described the circumstances leading to Yucaipa's investment in Barnes & Noble, why Yucaipa increased its holdings, and Yucaipa's response to Barnes & Noble's implementation of a poison pill.
According to Mr. Burkle, Yucaipa wanted to be able to purchase as many shares as were owned by the Riggio family, Barnes & Noble's largest shareholder. Mr. Burkle also wanted Barnes & Noble to add independent directors.
Mr. Burkle suggested that the terms of the poison pill were ambiguous as to whether conversations among shareholders might constitute a stockholder "agreement" that would trigger the pill, with "draconian" consequences, thus preventing an effective proxy challenge. According to Mr. Burkle, even Barnes & Noble's own attorneys could not specify when some conversations might trigger the pill.
Vice Chancellor Strine asked Mr. Burkle whether his goal in the conversations was to negotiate deals with shareholders to support his proposed slate. Mr. Burkle said that he understood that he could ask shareholders for input, but was worried that if a shareholder responded by suggesting a potential director, and Mr. Burkle subsequently added that director, it might be considered a deal. Therefore, shareholder discussions could be risky.
CVN is webcasting Yucaipa v. Barnes & Noble live.