Barnes and Noble has sent a letter to shareholders replying to charges leveled against the company by billionaire investor Ron Burkle who charged that the company’s board of directors has been “a rubber stamp for transactions benefiting the Riggio family,” most notably in approving in 2009 the $514 million purchase of a college bookstore business owned by B&N CEO Leonard Riggio and his wife.  Burkle has nominated an insurgent slate of directors and is hoping to get them elected so that they can reverse the poison pill provisions that are freezing his share of the company stock at about 20% (see “Proxy Fight at Barnes & Noble).

The college bookstore purchase is the centerpiece of Burkle’s campaign against B&N management.  According to the Financial Times in its letter to shareholders Barnes & Noble defended the purchase of the college bookstores saying that the stores were “delivering compelling shareholder value” and provide long term strategic benefits.

Barnes & Noble also charges that Burkle, who made his considerable fortune in the consolidation of the U.S. supermarket business in the 1990s, has no strategic plan for the company.  Burkle counters with his contention that Barnes & Noble’s investment in its Nook e-reader is a poor strategic choice given the head start enjoyed by Amazon’s Kindle and the aesthetic superiority of Apple’s iPad.  Certainly the decisions by Best Buy, Target, and Staples to sell the Kindle don’t bode well for the Nook’s chances to survive in a very competitive market.

Barnes & Noble contends that Burkle is working with Aletheia, a Los Angeles investment fund that owns 15% of B&N stock to gain control of the company.  It is certainly true that Aletheia has made parallel investments along with Burkle’s Yucaipa in the past in the A& P supermarket chain and the organic grocer Wild Oats.