Barnes & Noble Spikes on Yucaipa Bid

Barnes & Noble is surging after Yucaipa Funds tries to up its stake.
By Jeanine Poggi ,

NEW YORK (

TheStreet

)-

Barnes & Noble

(BKS) - Get Report

is continuing to surge following news that

Yucaipa Funds

has attempted to gain a 37% stake in the company.

Shares of the book retailer are spiking 13% to $20.35 in Tuesday morning trading.

Currently Yucaipa, run by investor Ron Burkle, owns 18.7% of Barnes & Noble. According to a Securities and Exchange filing, Burkle sent a letter to the company's board to get its approval to garner a 37% stake in the company. This would match the current stake hold by the controlling Riggio family.

Burkle is also asking the board to agree that increasing his stake to that size will not trigger the company's poison pill, and wants to ensure the Riggio family cannot acquire any more stock without triggering the pill.

In November Barnes & Noble instituted a shareholder-rights plan limiting new stakes by a single investor or group to 20% without board approval. It also limited holders who already held more than 20% from buying more stock.

A poison pill is usually put in place to deter hostile takeovers.

In the letter, Burkle also said Barnes & Noble's stock is undervalued.

Pressure has been mounting for the retailer. Last month, the company said holiday sales came in weaker than expected, prompting it to lower its fourth-quarter outlook. Investors also fear the new Nook e-reader will face increasing competition from

Apple's

(AAPL) - Get Report

iPad, unveiled last week.

-- Reported by Jeanine Poggi in New York.

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