By Phil Wahba
NEW YORK (Reuters) - Barnes & Noble IncChairman Leonard Riggio narrowly beat down an attempt bydissident investor Ron Burkle to join the top U.S. bookseller'sboard and said he would be soliciting interested buyers.
Preliminary results from Tuesday's annual shareholdermeeting showed that holders of 44 percent of the shareseligible to be voted supported the slate chosen by Riggio,while 39 percent supported Burkle's slate, according to asource familiar with the results. The rest did not vote, orwithheld their votes.
The outcome was confirmed by both Barnes & Noble and byBurkle's Yucaipa investment firm. Certification of finalresults could take several days.
The vote resolves a bitter proxy war between the twobillionaires but could weigh on Barnes & Noble's pursuit of asale, first announced in August. Shares of the company weredown about 1.3 percent at $16.24 on Tuesday afternoon.
Reuters Breakingviews piece on the winner's dilemma
faced by Riggio:
Timeline of key events in the Barnes & Noble proxy war:
"Our job is to get a lot of other bidders interested,"Riggio, the top Barnes & Noble shareholder with a 28.2 percentstake, told reporters after the meeting in New York.
Some 20 groups have signed or are expected to signconfidentiality agreements ahead of potential bids, with bookson the company being sent as of Tuesday, cable business channelCNBC said.
Riggio said in the past he would look for partners to buythe company, but declined to elaborate on his current plans. OnTuesday, he said he did not want to engage with Burkle giventhe personal tone of the rhetoric during the proxy war.
Burkle, whose investment firm Yucaipa owns 18.8 percent ofthe company, seized on the results to say Riggio must conduct atransparent auction that delivers the best possible outcome forinvestors. Some investors and analysts say Burkle may tenderhis own bid.
"The best way (Riggio) can support the company's efforts tomaximize stockholder value is a clear and unequivocal publiccommitment to support the highest bid for the company, even ifit is submitted by a third party, if he himself decides to makea bid," Burkle said.
Burkle started buying shares in Barnes & Noble in November2008, paying about $18 to $22 per share. Despite a 35 percentstock surge since the sale process was announced, Burkle wouldlose money if he sold shares at current prices.
"He is still far underwater with his investment. He couldstay and pepper the board and Riggio," said Morningstar analystPeter Wahlstrom, who estimates the fair value of Barnes & Nobleshares at about $13.
Short sellers, or investors whose strategy is to borrowshares and sell them at a higher price and return them whenprices fall, have taken a keen interest in Barnes & Noble sinceAugust and made the shares more volatile.
The percentage of shares held short as of Sept. 15 was 22.7percent, several times more than the average New York StockExchange-listed stock.
NO GAME PLAN
Burkle has accused Riggio of running the bookstore chainfor his personal benefit and leaving it ill-prepared for ashift to electronic books that has kept its sales in decline.
Burkle had the support of influential shareholder advisoryfirm Institutional Shareholder Services Inc, but never putforth a detailed business plan, drawing criticism by analystsand some shareholders.
Burkle, who is based in Los Angeles, did not attend theshareholder meeting in Manhattan.
"Burkle didn't have the courtesy to show up," saidindividual investor Howard Tannenbaum. "Riggio and his brotherbuilt up the company. What does Burkle know about bookselling?"
Some 43 percent of shareholders also rejected Burkle'sproposal to amend an anti-takeover "poison pill" put in placeby the company in November after Yucaipa doubled its stake in amatter of days, the source familiar with the results said.About 39 percent supported the proposal.
The poison pill limits any shareholder, except for Riggio,who is grandfathered, from holding 20 percent or more of thecompany. Shareholders are set to vote in a special meeting onNov. 17 on whether to ratify the pill.
Burkle sought to raise the pill's trigger to 30 percent andis appealing a Delaware court ruling in August to uphold it.
Along with Riggio, outside directors David Golden, apartner in investment firm Revolution LLC, and David Wilson,chief executive of the nonprofit organization that runs theGraduate Management Admission Test, were elected to the boardfor three-year terms. (Editing by Maureen Bavdek, Gunna Dickson and Matthew Lewis)