Barnes and Noble shares (BKS) soared in after hours trading yesterday after the company reported in a filing that it had received a letter from an investment owned by billionaire investor Ron Burkle.
Major shareholder Mr. Burkle, through his investment company Yucaipa Companies, has asked for permission to raise his stake in the company to 37% from an estimated 18.7% right now.
Ordinarily, any stake above 20% would trigger a poison pill provision put in place by Barnes & Noble’s founding shareholder Leonard Riggio.
Mr. Burkle appears to be gunning for a take over, since a 37% stake would make him a larger shareholder than Mr. Riggio. This could result in a nice take over premium for BKS shares in the months to come.
In Burkle’s letter, he reiterated concerns about Barnes & Noble’s corporate governance policies and enforcement, according a filing with the U.S. Securities and Exchange Commission.
He also asked the board to confirm that members of the Riggio family cannot collectively or individually buy any more shares without triggering the poison pill.
The author does not own shares in BKS.
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