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Barnes & Noble: How Did Independent Shareholders Vote? - Aletheia

Pop1444 views  2010-09-28 09:34   TagsBKS 

When reading media reports on the Barnes & Noble (BKS) board election, it's important to read the whole article and ignore some of the surface statements.

For example: some reports say that shareholders decided to backed Riggio. Right now, we don't know that. Riggio won the shareholder vote. However, most of Riggio's support came from Riggio himself.

So, we need to step back and look at how much support Riggio got from people besides himself and his brother. We also need question Burkle's statement that "independent" shareholders strongly supported him. Does he mean Aletheia is independent? From his press release, it certainly seems that way.

I'm more interested in knowing how folks other than the Riggios, Barnes & Noble insiders, Yucaipa, and Aletheia voted. How did that vote breakdown? How many unaffiliated shareholders didn't vote?

The New York Times's Deal Book and Reuters are reporting actual percentages. Neither of the two parties gave numbers in their releases. Both Deal Book and Reuters are saying it was 44% for Riggio. They differ on whether it was 38% or 39% for Burkle. And Reuters says it was 43% instead of 44% on support of the posion pill. So there was a smidge of ticket splitting.

The important question is how seriously we should take what Burkle said about Aletheia's non-votes. The pro-Riggio vote wasn't strong. Riggio started with 38% to 39% of the vote. Only about 5% came from campaigning. It's all about why Burkle couldn't get to 44%. Not why Riggio could.

Comments Comments (4 )

  • kidchoi 2010-09-28 10:23
    Why did Aletheia withhold their votes???  Do we know that for sure?
    Reply
  • Geoff Gannon 2010-09-28 11:52
    No. Aletheia did not withold all their votes. This is what Burkle said:

    "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."

    Previously, there had been speculation from Aletheia and Yucaipa that Aletheia might not be able to vote all their shares. But based on what I read about Aletheia's policy, that would not be a problem. I don't think it was. From what Yucaipa's press release said we know that some shares were out on loan. But it's not 100% clear from the release that they are saying they definitely did not vote shares that they had every right to. And if so, we don't know how much that mattered. I'll look into this and post if and when I know something. It could be days before we have a better handle on the results. When we do, I'll write about it.
    Reply
  • kidchoi 2010-09-28 12:08
    It just doesn't add up, why Aletheia even allowed this to happen.  It seems to me this only makes it harder for the company to get sold and there is a real conflict with Biggio's shares.  Seems we are in the same boat as Yukaipa and at this stage we can only count on the two to come to some sort of an agreement.  I doubt a 3rd party would bid...
    Reply
  • Geoff Gannon 2010-09-28 14:06
    I don't know. It's important to wait and get more facts. Take some time to digest the news. Also, there will be 3rd parties at least interested. The media has already reported there are many outsiders interested in considering this. It just won't be soon. And they will be reluctant to bid when they don't know if they have support of Riggio or Burkle. But this doesn't just go back to normal. It's not like Riggio "controls" the company at any price anymore. He can't just obstinately reject a bid. The board could end up in "Revlon Mode" if there are two bidders. They'd have to support the higher bid if it was at all reasonable. People are blowing the finality of this out of proportion. The most likely scenario is one or more bids in the next 6 months. Burkle's actions have made some sort of extraordinary corporate event much more likely. An agreement between Burkle and Riggio - while not necessarily bad for the company long-term - would be the worst sign for a short-term catalyst. If Riggio and Burkle both keep their stakes intact and both continue to despise the other, that is the best chance for action in the next year. While it's certainly possible there will never be a bid at prices we would like, the idea that Riggio controls his own destiny is absurd. No one is fully in control of events now. All Riggio has won here is the ability to match any bidder's price and keep the company if he does and the ability to makes things messy for other bidders. But he can't turn back the clock to before Burkle started buying. Only Burkle can do that. BKS is in play until we know otherwise.
    Reply


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