Worth fighting for?

<p>As a former Barnes &amp; Noble employee, I have been watching the Battle For B&amp;N in the US between chairman Len Riggio and billionaire investor and B&amp;N minority shareholder Ron Burkle with some interest. <br />
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To update briefly: about three weeks ago B&amp;N announced it was putting itself up for sale because the board felt its shares were &ldquo;significantly undervalued&rdquo;. This came amid the struggle for control of the company between the Riggio family (who have about 35% of the company's shares) and Burkle, who has a 19% stake. The colourful Burkle&mdash;he's a close pal of Bill and Hillary Clinton and is the godfather to P Diddy's two children&mdash;has launched a proxy fight to unseat the three directors up for re-election at B&amp;N's AGM in late September, including Riggio himself. To shore up his position, Riggio last week bought almost one million B&amp;N shares, to the tune of $16.8m.<br />
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Exciting stuff, if you're into blood-on-the-boardroom-carpet shenanigans. In a strange way, though, I am rather cheered at the animosity: it means at least two people think that a bricks and mortar bookseller is worth fighting for.&nbsp; <br />
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I worked at B&amp;N during the 1990s when the Big Green Machine was expanding rapidly, not entirely troubled by Amazon and, yes, leaving the crushed corpses of many an indie bookseller in its wake. That was its heyday, and by 2002 Wall Street thought it was still a pretty good bet, with its shares going for about $45. Fast-forward to today and its shares are going for under $16 (Riggio paid above market value for his recent grab). When the bookseller announced that it wanted to sell a couple of weeks ago, most analysts said it would struggle to find a buyer.<br />
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Riggio's motives for wanting to regain full control of the company and take it private seem obvious. Sure, for about 20 years he has been demonised by indie booksellers in the US, but he is first and foremost a bookseller, and built B&amp;N into what it is. He is battling for his legacy. But he is not foolish and obviously believes there is still mileage in B&amp;N. Not incidentally, he has more than a bit of cash to back up his vision. His personal wealth is estimated at about $1.3bn, which includes the rather controversial $514m he and his wife picked up by selling the B&amp;N textbook division (which the couple owned outright) back to B&amp;N last autumn.&nbsp;&nbsp;&nbsp; <br />
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Burkle is not a books guy. He made his first fortune in supermarkets and his private equity firm Yacaipa Companies diverse portfolio is worth about $9bn. His interest in B&amp;N at first glance seems curious: in the digital age who wants to get hold of a company with almost 1,400 physical shops? But digital is one of the major reasons for his interest in B&amp;N. Burkle has been vocal in stating how they believe B&amp;N has not leveraged the brand loyalty many customers have for the bookseller into the digital arena. He also previously urged B&amp;N to create partnerships with major technology players like Microsoft and HP, which Riggio has rejected.<br />
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Riggio, incidentally, would not disagree with Burkle's assessment that online and e-books are a significant way forward for B&amp;N&mdash;the bookseller's digital business rose 51% in the fourth quarter last year. B&amp;N historically has not been digital phobic. Quite the opposite, it jumped in too soon: it launched an e-book site way back in 2001 (on the unfortunate date of September 11th) which stumbled along until 2003 when it was closed down because the market simply wasn't there yet. It perhaps erred in not getting back in quickly enough. When B&amp;N finally launched phase two with the Nook last year, it was chasing the Kindle store. <br />
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The crux of the fight is probably more about degree and direction. There is an underlying agreement between Riggio and Burkle in that both believe there is a future for B&amp;N. There will undoubtedly be some pain&mdash;most analysts think sheer size of the physical estate is far too vast and stores will have to be closed. But a managed transition, brokered upon the public's brand loyalty, to a sensible, forward-looking strategy that combines p and e is can be possible, and profitable. It's a sentiment that might chime on these stores in, say, the HMV boardroom.</p>