Grant & Eisenhofer and Chimicles & Tikellis Secure $29 Million Payment from Barnes & Noble Chairman Leonard Riggio in Settling Shareholder Derivative Suit
WILMINGTON, Del., June 13, 2012 /PRNewswire/ — The law firms of Grant & Eisenhofer P.A. and Chimicles & Tikellis LLP have reached a settlement on behalf of Barnes & Noble (NYSE: BKS) with the company’s founder and controlling shareholder Leonard S. Riggio. The settlement, totaling more than $29 million and subject to approval by the Delaware Court of Chancery, will conclude a shareholders’ derivative action brought in 2009 relating to Barnes & Noble’s acquisition of textbook retailer Barnes & Noble College Booksellers, Inc. Prior to the acquisition, Barnes & Noble College Booksellers was a separate company wholly owned by Mr. Riggio and his wife, Louise.
The recovery will be funded by a $22.75 million reduction in the purchase price of a $150 million promissory note plus a $6.3 million reduction in interest payments due on the note through its 2014 maturity date. The note was issued following Barnes & Noble’s 2007 acquisition of textbook retailer Barnes & Noble College Booksellers Inc.
The lawsuit challenged the boards’ approval of the acquisition, alleging that the deal overpriced the college retailer and that directors breached fiduciary duties by approving the purchase that essentially doubled B&N’s exposure to bricks and mortar operations while the publishing industry has moved to a digital format. The suit alleged that the driving purpose behind the deal was to enrich Mr. Riggio at the expense of all B&N shareholders. Among other things, the complaint targeted a junior subordinated note in principal amount of $150 million, payable in full to Mr. & Mrs. Riggio on the fifth anniversary of the closing of the acquisition, with an annual interest of 10%.
Chancery Court Chancellor Leo E. Strine, Jr. ruled on March 27, 2012, that a civil trial could move forward in the case against Mr. Riggio and two other former Barnes & Noble directors. A trial date had been set for this coming June 18. Chancellor Strine had previously struck down defendants’ motion to dismiss the derivative suit in October 2011.
The $29 million payment to Barnes & Noble is the latest development invigorating the company. It follows an April 30 announcement by Barnes & Noble and Microsoft to form a strategic partnership in which the software giant will make a $300 million investment in a new B&N subsidiary that will combine the bookseller’s digital and college businesses.
Michael Barry, Grant & Eisenhofer partner and co-lead counsel in the derivative litigation, said: “We are very pleased with today’s settlement on behalf of Barnes & Noble. We believe the transaction as originally structured was unfair to the Company, and are happy the Company will receive this compensation.”
Co-lead counsel Pamela S. Tikellis of Chimicles & Tikellis stated: “The settlement will provide significant financial benefits to Barnes & Noble and its investors as the company further expands its business into the digital market.”
The case is styled: In Re Barnes & Noble Stockholder Derivative Litigation, C.A. No. 4813-CS.
Note: Grant & Eisenhofer P.A. represents institutional investors and shareholders internationally in securities class actions, corporate governance actions and derivative litigation. The firm has recovered more than $13 billion for shareholders in the last five years and has consistently been cited by RiskMetrics for securing among the highest average investor recovery in securities class actions. Grant & Eisenhofer has been named one of the country’s top plaintiffs’ law firms by The National Law Journal for the past six years. For more about Grant & Eisenhofer, visit www.gelaw.com.
Institutional investors, individuals and businesses have relied on Chimicles & Tikellis LLP for over 25 years to litigate securities fraud, fiduciary duty, consumer and antitrust cases. Having recovered billions of dollars on behalf of its clients, Chimicles & Tikellis has earned a reputation as skilled and aggressive litigators. The firm has significant experience in prosecuting class action and derivative litigation in state and federal courts, including the United States Supreme Court. Chimicles & Tikellis has been recognized by SCAS 50 and Best Law Firms as one of the leading plaintiffs’ law firms. Visit www.chimicles.com for additional information about Chimicles & Tikellis.
SOURCE Grant & Eisenhofer P.A.