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SANDELL ISSUES LETTER TO BARNES & NOBLE BOARD OF DIRECTORS

Sandell Believes that the Iconic Bookseller Should Not be a Stand-Alone Public Company; A
Value of $12.00 per Share, and Possibly Higher, Could be Justified in a Going-Private
Transaction

Public Market Not Hospitable for Retailers; Stakeholders Better Served by Barnes & Noble
Operating as a Private Entity or as a Division within a Larger Organization

Investor Views Barnes & Noble Stores as Beachfront Property that may Hold Significant
Strategic Value to Internet or Media Companies Seeking a Retail Presence

Sandell Seeks Constructive Dialogue with the Board of Barnes & Noble

New York (July 25, 2017) - Sandell Asset Management Corp. (Sandell) has acquired a meaningful
ownership stake in Barnes & Noble, Inc. (BKS or Barnes & Noble or the Company) (NYSE:BKS),
the nations largest specialty book retailer, and today publicly released the following letter to the Board of
Directors (the Board) of the Company:

July 25, 2017

The Board of Directors


Barnes & Noble, Inc.
122 Fifth Avenue
New York, NY 10011

Ladies and Gentlemen:


We are strong believers in the vital service that Barnes & Noble provides as the nations largest book
retailer, and we have accumulated a meaningful ownership stake in the Company, as we think that the
current approximately $520 million market value of Barnes & Noble is unconscionably low and fails to
reflect the true value of the Company. As you are Board members of a retailer whose existence depends
on peoples quest for knowledge, we trust you may be familiar with some of the following comments:

A room without books is like a body without a soul Cicero

When I get a little money I buy books; and if any is left I buy food and clothes - Erasmus

I cannot live without books Thomas Jefferson


I guess there are never enough books - John Steinbeck

Only in books do we learn whats really going on Kurt Vonnegut

We believe that millions of readers in the United States share - to varying degrees - the sentiments
expressed in the above quotations. Those shared sentiments help explain our conviction in the potential
value inherent in Barnes & Noble. As professional investors, however, we also recognize that the value
of a publicly-traded company is measured by one sole metric: its stock price. Unfortunately, by this critical
measure, we do not believe the true intrinsic value of BKS is being adequately reflected. To put a fine
point on this matter, according to Bloomberg, the Enterprise Value (Market Value + Net Debt) of
Barnes & Noble has fallen to about 3.2x FY2018E EBITDA, lower than nearly every other publicly-
traded retailer. This in and of itself is shocking considering the steep and across-the-board drop in retail
valuations that we have seen in 2017.

What makes the under-valuation of Barnes & Noble all the more shocking is that, as opposed to the
numerous other national apparel, footwear, grocery, and home furnishing chains abounding in this
country, there is but one truly national bookstore chain. So while there may be 10 different stores in a
typical urban shopping area where one can go to purchase a T-shirt, there is almost no other bricks and
mortar option when it comes to buying a book. Yet notwithstanding the ill-considered notion that books
are a thing of the past proffered by some, a view probably embraced by the same people who also
(wrongly) thought that Amazon.com would have put Barnes & Noble out of business 10 years ago, it is
our contention that physical books, and physical bookstores, are not going away anytime soon.
Furthermore, even if book sales were to decline, it is our belief that the discounted value of the future
stream of cash flows that BKS could expect to generate, otherwise known as its intrinsic value, would far
exceed the current enterprise value of the Company.

Due credit must be given to the Companys 76-year old founder and Chairman Leonard Riggio for
creating such an iconic company as Barnes & Noble. However, we must also call attention to certain
strategic missteps and many troubling related-party transactions that we believe have taken place over
the years on his watch. It is beyond the scope of this initial letter to discuss in great detail these issues,
such as the sale of Mr. Riggios own college book business to BKS for more than $500 million and the
hundreds of millions of dollars that the Companys failing and poorly-conceived Nook business may have
cost shareholders, along with the Companys inexplicably high SG&A expense structure and parade of
CEOs who have come and gone in the last few years. Instead, one need only focus on Mr. Riggios
inability to reposition Barnes & Noble as a vital strategic retail asset for the vibrant information economy
of the 21s Century to see how he has let shareholders down.

In fairness, there are other reasons that Barnes & Noble, and indeed many other publicly-traded retailers,
are facing disfavor amongst investors, one prime reason being the massive and indiscriminate sell-off
that has plagued the sector in general. It is our opinion that the public market for retail stocks is
contributing to a risky and inhospitable environment under which the stock price of Barnes &
Noble may not fairly reflect its intrinsic value anytime in the foreseeable future if it remains a
stand-alone company. It has become clear to us that all of the Companys stakeholders would be better
served if Barnes & Noble were operated as a private company or as a division within a larger company,
which would allow management to focus 100% of its attention on the Companys underlying operations.
To wit, it is our belief that Barnes & Noble should be owned by an organization with both the vision and
stability of capital that investors in the public market generally cannot provide.

What highlights the timeliness of this matter are two recent transactions in the retail space, namely the
proposed acquisition of Whole Foods Market, Inc. (Whole Foods) (NASDAQ: WFM) by Amazon.com,
Inc. (Amazon) (NASDAQ: AMZN) and the proposed acquisition of Staples, Inc. (NASDAQ: SPLS) by
the private equity firm Sycamore Partners LLC, as well as the news that Nordstrom, Inc. (NYSE: JWN)
may be exploring a going-private transaction involving members of the Nordstrom family. In each of
these cases, sophisticated investors and operators are coming to the realization that the public
market is not affording retail stocks fair value and are putting their money where their mouth is,
signifying that, for all the doom and gloom surrounding retail, there is still capital available to
purchase quality assets.

It is a damning commentary on the absurdly short-sighted nature of the public markets that the sole
national book retailer in the United States, with strong cash flow (over $180 million in FY2017 Adjusted
EBITDA), a loyal customer base, and a truly enviable, countrywide footprint of stores in highly-favorable
locations, is being afforded a market value of a mere $520 million. One need only read the following
insightful tweet regarding Amazons proposed $13 billion purchase of Whole Foods by The Wall Street
Journals Dennis Berman in order to see this valuation disconnect as well as envision the strategic value
that Barnes & Noble may hold: Amazon did not just buy Whole Foods grocery stores. It bought 431
upper-income, prime location distribution nodes for everything it does.

It is our opinion that Barnes & Noble, with its 633 stores, is similar beachfront property. Even
at a purchase price of $1 billion, or close to double the current market value of BKS, such a price
would be a rounding error compared to the market value of a host of internet or media
companies looking for a retail presence, with the added benefit being that Barnes & Noble is
already in the same fundamental business, namely the distribution of information. While Leonard
Riggio may not have grasped this essential congruence, visionary leaders in the technology, social
media, or publishing space may be able to better capitalize on the unique position Barnes & Noble holds.

On the other end of the spectrum, from a purely financial point of view, the robust cash flow and low
leverage of BKS makes the Company highly-attractive to a financial buyer such as a private equity firm.
We believe a financial sponsor could pay a price of more than $12.00 per share, over 60% higher than
the stock price of $7.15 as of July 21, and still generate a 5-year IRR in excess of 20%. In fact, Leonard
Riggio himself, with his approximate 18.0% equity stake in the Company, could seek to take the company
private in a leveraged acquisition at a fair price for public shareholders, as he had publicly sought to do
back in 2013. Indeed, considering the hundreds of millions of dollars that Mr. Riggio has personally
realized from the aforementioned sale of his college books business as well as other businesses, he
clearly has the financial resources to take the Company private.

For all these reasons, it is our belief that now is the time for the Board of Directors (the Board) to retain
a qualified, nationally-recognized investment banking firm in order to conduct an expansive strategic
alternative process aimed at achieving a privatization of BKS at a price that delivers fair value to the
Companys shareholders. Given our concerns, my colleague Richard Mansouri and I thought it would be
most constructive to seek dialogue with the Board of Directors of the Company as soon as is possible,
as it is our preference to resolve this situation in an amicable manner. That said, as our persistent
efforts as long-term shareholders to see value quite successfully delivered to the shareholders
of companies such as Bob Evans Farms, Inc. (NASDAQ:BOBE) and Viavi Solutions Inc.
(NASDAQ:VIAV) should illustrate, our firm is prepared to stay the course to see value delivered
to the true owners of a company, namely its shareholders.

We look forward to being in contact.

Sincerely,

Thomas E. Sandell
Chief Executive Officer

About Sandell Asset Management Corp.

Sandell Asset Management Corp. is a leading private, alternative asset management firm specializing in
global corporate event-driven, multi-strategy investing with a strong focus on equity special situations
and credit opportunities. Sandell Asset Management Corp. was founded in 1998 by Thomas E. Sandell
and has offices in New York, Boca Raton, and London, including a global staff of investment
professionals, traders and infrastructure specialists.

Contact:

Sandell Asset Management Corp.

Triet Leminh, 212-603-5816

Sloane & Company

Dan Zacchei or Joe Germani, 212-446-1882

Cautionary Statement Regarding Opinions and Forward-Looking Statements

Certain information contained herein constitutes forward-looking statements with respect to the Company, which
can be identified by the use of forward-looking terminology such as may, will, seek, should, "could," expect,
anticipate, project, estimate, intend, continue or believe or the negatives thereof or other variations thereon
or comparable terminology. Such statements are not guarantees of future performance or activities. Due to various
risks, uncertainties and assumptions, actual events or results or actual performance may differ materially from those
reflected or contemplated in such forward-looking statements. The opinions of Sandell Asset Management Corp.
and its affiliates ("Sandell") are for general informational purposes only and do not have regard to the specific
investment objective, financial situation, suitability or particular need of any specific person, and should not be taken
as advice on the merits of any investment decision. This material does not recommend the purchase or sale of any
security. Sandell reserves the right to change any of its opinions expressed herein at any time as it deems
appropriate. Sandell disclaims any obligation to update the information contained herein. Sandell and/or one or
more of the investment funds it manages may purchase additional shares or sell all or a portion of their shares or
trade in securities relating to such shares.