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Barnes & Noble says no agreement with Yupaica

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NEW YORK — Barnes & Noble said Thursday it has not reached a settlement with financier Ron Burkle's Yucaipa Cos. after news reports the companies were close to a deal.

Burkle, who owns a 19 percent stake in the bookseller, is suing the company in an effort to expand his stake without triggering a poison pill plan.

Late Wednesday the Wall Street Journal and The New York Times, citing sources familiar with the situation, both reported the two were close to a settlement agreement so Barnes & Noble could avoid a costly proxy fight and concentrate on selling off the company.

But Thursday Barnes & Noble issued a statement that it and Yucaipa "were unable to conclude an agreement on mutually acceptable terms."

Yucaipa could not immediately be reached.

In late July a judge heard final arguments in the lawsuit in Delaware Supreme Court and said he would try to issue a ruling quickly.

Burkle has indicated that he wants to wage a proxy contest to elect three new directors and would like time to buy more voting shares before a Monday deadline if the judge rules in his favor.

If the two sides do eventually come to an agreement, Burkle would end his bid to gain more control over the book seller.

Burkle has challenged Barnes & Noble's poison pill strategy, which prevents anyone from taking more than a 20 percent stake in the company without board approval.

Burkle is arguing the rights plan creates an unfair playing field that favors the controlling Riggio family, which owns more than 30 percent of the company's common stock.

Barnes & Noble's share price has slid 24 percent since the beginning of the year and the company is struggling, along with other book retailers, as consumers pare down on purchases because of the economic downturn. Shoppers also are shifting away from paper books toward electronic books, much as they have done with music, moving away from CDs toward digital downloads. The company faces steep competition from Amazon.com and rival Borders Group Inc.

Earlier this month, Barnes & Noble made a surprise announcement that it was exploring options, including putting itself up for sale.

Barnes & Noble's annual shareholder meeting is scheduled for Sept. 30. Its shares rose 29 cents in midday trading to $14.77.

Associated Press Writer Emily Fredrix in New York contributed to this report.