Barnes and Noble Shareholders Revolt Against Riggio Brothers
Posted on August 21, 2009Barnes & Noble shareholders are furious over the company's recent acquisition of the college textbook division, which is owned by the founder of Barnes & Noble, Leonard Riggio. In fact, they're so mad they're suing to stop the deal, alleging that the deal is bad for shareholders and will unjustly enrich Riggio and majority shareholders. The shareholders derivative action says the $596 million purchase wastes company assets.
With used textbooks available on the Internet and rental textbooks available for 40 percent to 70 percent off sale price, the college textbook business has entered "permanent decline," says lead plaintiff the Louisiana Municipal Police Employees Retirement System.The lawsuit was filed against Barnes & Noble, brothers Leonard and Stephen Riggio brothers and six other directors, and alleges breach of fiduciary duty. It's never a good sign when your shareholders start claiming breach of fiduciary duty and start suing.
Barnes & Noble's offer to buy the College Booksellers division from company founder, chairman of the board and controlling shareholder Leonard Riggio offers far more than what a third party would pay to buy the floundering branch, the shareholders say.
The deal lacks transparency, since Barnes & Noble did not submit history or projections for the division's performance, according to the complaint, which alleges that company directors approved the acquisition because they are indebted to Riggio.