WASHINGTON (dpa-AFX) - Barnes & Noble's (BKS) founder and controlling shareholder Leonard Riggio has settled a shareholders' lawsuit for $29 million, which is subject to approval by the Delaware Court of Chancery.
The lawsuit was brought in 2009 and relates to the company's 2007 acquisition of textbook retailer Barnes & Noble College Booksellers Inc., which prior to the acquisition was a separate company owned by Riggio and his wife, Louise.
The lawsuit challenged the boards' approval of the acquisition, alleging that the deal overpriced the college retailer and that directors breached fiduciary duties. It also alleged that the purpose behind the deal was to enrich Riggio at the expense of all of the company's shareholders.
The lawsuit, among other things, targeted a junior subordinated note in principal amount of $150 million, payable in full to Riggio and his wife on the fifth anniversary of the closing of the acquisition, with an annual interest of 10 percent.
The $29 million settlement will be funded by a $22.75 million reduction in the purchase price of the $150 million promissory note, and a $6.3 million reduction in interest payments due on the note through its 2014 maturity date.
Chancery Court Chancellor Leo Strine, Jr. ruled last March that a civil trial could move forward in the case against 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 company subsidiary that will combine the bookseller's digital and college businesses.
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