Grant & Eisenhofer Secures $29 Million Payment from Barnes & Noble Chairman Leonard Riggio in Settling Shareholder Derivative Suit

Recovery for bookseller stems from suit challenging 2007 acquisition of textbook unit; Riggio to pay back company from personal proceeds.

WILMINGTON, DE (June 13, 2012) – The law firm of Grant & Eisenhofer P.A. has 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.”

The case is styled: In Re Barnes & Noble Stockholder Derivative Litigation, C.A. No. 4813-CS.