Days after Liberty Media announced a offer to buy bookseller Barnes & Noble, Weiss & Lurie—a national class action and shareholder rights law firm—announced that they are looking into whether Barnes & Noble’s board of directors is acting in the best interests of the company’s shareholders as they negotiate with Liberty Media. At issue is if the board is in breach of its duties to shareholders if it were to accept the Liberty Media acquisition without considering alternative bidders.
This comes one day after Ronald Burkle of Yucaipa Companies purchased another 603,000 shares of Barnes & Noble.
For years, Burkle has been publicly vocal about his view that Leonard Riggio, the chairman of Barnes & Noble and its largest stockholder, has not acted with the best interests of other shareholders in mind. Frankly, I feel comfortable in speculating that Burkle may well be the one who has involved Weiss & Lurie in this battle, but perhaps with good cause. As a former shareholder of Barnes & Noble, I agree with Burkle’s assessment of Riggio’s actions.
It’s probably unlikely that a class action suit will come of this, but it is an interesting plot arc in the Barnes & Noble saga, and it does raise good questions regarding other offers the company has received. By the end of 2010, it was being reported that more than twenty private equity firms were considering a deal. So, what happened to those offers? With twenty-plus suitors, Liberty Media cannot be the only attractive offer. Presumably, other offers have been made and shareholders have the right to full disclosure regarding any potential offers made.
All of this could be moot anyway. Liberty’s offer was for $17 a share, and ever since the offer was made public, shares have been trading much higher than that. Today, shares of Barnes & Noble (NYSE: BKS) closed at $19.21. With tons of uncertainties surrounding a media company owning and running a retail bookseller, the offer price was really the only attractive part of Liberty’s offer, so if other offers are made, they will have to be well above $17 a share for shareholders to even entertain them. However, every aspect of a potential deal should be made available to shareholders, regardless of who the bidder is.