Just days after Barnes & Noble announced that it was paying $215 million to acquire Babbage's, a video game/software chain owned by B&N chairman Len Riggio (News, Oct. 11), several B&N investors filed suit to stop the transaction.
The suit alleges that the bookseller's purchase of Babbage's, which also owns Software Etc. and Gamestop.com, is not in the best interest of the bookseller and took place because Riggio stood to benefit. The investors, known as Harbor Finance Partners, have filed a motion in Delaware that seeks not only to prevent the deal, but to have Riggio's profits put into a separate trust.
Barnes & Noble called the suit "frivolous" and has cited outside experts who have assessed the move as sound. Wall Street weighed in with its own evaluation when it sent B&N's stock down about three points the day after the announcement was made.