Law firm launches investigation of Barnes & Noble acquisition

New York City A New York law firm said Friday it is investigating what it says are possible breaches of fiduciary duty and other state law violations by Barnes & Noble from its proposed purchase of Barnes & Noble College Booksellers.

Wolf Haldenstein Adler Freeman & Herz LLP said it is investigating if the company is overpaying for Barnes & Noble College Booksellers due to its relationship, thus unlawfully harming Barnes & Noble shareholders.

On Aug. 10, Barnes & Noble announced that it would acquire Barnes & Noble College Booksellers in a transaction valued at $596 million.

Barnes & Noble College Booksellers is owned by Barnes & Noble chairman Leonard Riggio.

In related company news, a Wall Street analyst downgraded Barnes & Noble on Friday, saying its proposed acquisition of Barnes & Noble College Booksellers makes it more vulnerable to a risky sector.

"Taking a deeper look, the deal strategically makes little sense over time as the company essentially doubles its exposure to one of the segments that we believe are most at risk to technology change over the next several years, as well as reduces the cash element of the Barnes & Noble story that has supported it for so long," Gary Balter wrote in a client note.

The analyst lowered Barnes & Noble to "underperform" from "neutral."