Barnes & Noble Slate “Wins” Without Majority of Independent Votes

The Yucaipa Companies today said that preliminary vote totals show that Barnes & Noble, Inc. (NYSE: BKS) stockholders not affiliated with either Leonard Riggio or Yucaipa voted overwhelmingly for the Yucaipa nominees and poison pill proposal, but due to the insurmountable voting advantage of Leonard Riggio and other insiders the Barnes & Noble slate prevailed.

Yucaipa noted that although Leonard Riggio started with a substantial voting advantage, preliminary tallies showed that less than 50% of the outstanding stock voted for him and his slate of director nominees. Leonard Riggio and other insiders own 36% and 2% of the outstanding shares are owned by other employees. Yucaipa owns 19% of the outstanding common shares.

Ronald W. Burkle, founder and Chairman of The Yucaipa Companies, said that while Yucaipa was pleased with the changes it was able to bring about by issues it raised in the proxy contest, there was a great deal still to do and that Yucaipa will continue to press for changes at Barnes & Noble.

Mr. Burkle said the changes resulting from Yucaipa’s pressure and attention during the proxy contest include:

• The removal of Stephen Riggio as CEO;
• The replacement of two conflicted incumbent directors with two independent directors;
• Commencement of a review of strategic alternatives;
• Fresh discussions with potential technology partners.

“While an outright victory would have been the best way to ensure a fair process, we want to thank the independent stockholders who supported us by more than a wide margin,” Mr. Burkle said “As we pointed out to Vice Chancellor Strine in August, it is nearly impossible for any stockholder to do something Leonard Riggio doesn’t want to do because of his built-in voting advantage. Nevertheless, we hope the Board heard today’s message loud and clear and that the strategic alternatives review will be prompt, fair, transparent, and conducted on a level playing field for all bidders.

“To that end, we believe that it is important that Leonard Riggio himself send a message that the strategic alternatives review process is fair and non-discriminatory,” Mr. Burkle continued. “We think the best way he can support the Company’s efforts to maximize stockholder value is a clear and unequivocal public commitment to support the highest bid for the Company, even if it is submitted by a third party, if he himself decides to make a bid for the Company.

“We believe that will give interested bidders the confidence to bid despite Mr. Riggio’s significant locked-in stock ownership and voting advantage under the poison pill, and will provide stockholders comfort that the strategic alternatives review can maximize stockholder value and will not just result in a lowball buyout by Mr. Riggio,” Mr. Burkle said.

Mr. Burkle added, “If Mr. Riggio is unwilling to make that commitment, we challenge the Committee overseeing this process to insist on it as a condition of entertaining a bid from him or, at a minimum, amend the poison pill to allow other bidders to neutralize Mr. Riggio’s voting bloc.”

Yucaipa pointed out that based upon the analysis of its proxy solicitor, a significant percentage of shares reported as owned by Aletheia Research & Management Inc. were out on loan at the time of the record date or simply not voted by Aletheia. Contrary to statements made by Barnes & Noble and as Yucaipa and Alethia testified under oath in the Delaware Chancery Court, Yucaipa and Alethia were not working together.