Barnes & Noble Inc. Chairman Leonard Riggio agreed to obtain approval from the board before joining a group to make a bid for the largest U.S. bookstore chain.
Riggio, also the company’s founder, will ensure that if Barnes & Noble is sold, it will be acquired by the highest bidder to maximize shareholder value, according a regulatory filing with the U.S. Securities and Exchange Commission.
Barnes & Noble, based in New York, appointed board members to a special committee in August to oversee strategic alternatives that may result in a sale of the company. Riggio, the largest investor, may be part of a group that bids, the company also said at the time.
Shareholders voted last month to re-elect Riggio to the chairman role after a proxy challenge from Ron Burkle’s Yucaipa Cos. to put three people, including Burkle, on the board. Burkle, the second-largest shareholder, and Riggio have clashed for a year on strategy as the company tries to keep 700 superstores profitable amid the growing popularity of digital books.
The agreement allows Riggio to disclose confidential and trade-secret information to representatives of Peter J. Solomon Co. and Hughes Hubbard & Reed LLP for evaluating participation in a possible sale of the company, the filing said.
Yucaipa may consider making a bid on the condition that Riggio agreed to vote for the highest offer, Burkle said in an interview last month. A spokesman for Yucaipa didn’t immediately respond to a request for comment.
Barnes & Noble fell 39 cents, or 2.5 percent, to $14.96 at 4 p.m. in New York Stock Exchange composite trading. The shares have dropped 22 percent this year.
Burkle, who owned about 19 percent of shares as of May 5, asked the board unsuccessfully in January to increase the amount that he can own to 37 percent. Yucaipa filed a lawsuit in May to have the takeover-defense rule overturned. A Delaware judge upheld the provision on Aug. 12 and a few hours later Yucaipa filed a proxy to get board seats and raise the share limit.