Monday, April 30, 2012

Microsoft, Barnes & Noble team up on Nook, college businesses

Barnes & Noble Inc. and Microsoft Corp. say they are teaming up to create a new Barnes & Noble subsidiary that will house the digital and college businesses of the bookseller and include a Nook application for Windows 8.

The companies say they are exploring separating those businesses entirely. That could mean a stock offering is in the works. Microsoft will make a $300 million investment in the subsidiary for an approximately 17.6 percent stake.

Barnes & Noble will own about 82.4 percent of the subsidiary, which has yet to be named. The companies say the subsidiary will help to speed the transition to e-reading.

Barnes & Noble sells the Nook e-reader. The Nook app will make Barnes & Noble's catalog of e-books, magazines and newspapers available to Windows customers
Microsoft will invest $300 million in Barnes & Noble’s digital and college businesses, valuing them at $1.7 billion. Shares of Barnes & Noble jumped 79%.

Microsoft will get a 17.6 per cent stake in the new unit, while Barnes & Noble will own about 82.4 per cent, the companies said in a statement on Monday.

The business, whose name has not yet been decided, will have an ongoing relationship with Barnes & Noble's retail stores.

Barnes & Noble, the No 1 US bookstore chain, said in January that it might spin off its digital business, which includes its Nook e-reader.

The companies will introduce an application for the Nook on Windows 8, the upcoming version of Microsoft's operating system.

Barnes & Noble is investing heavily to develop its popular Nook devices and the e-books sales they generate as readers move away from traditional books.

Barnes & Noble and Microsoft have settled their patent litigation, the companies said.

Shares of Barnes & Noble were up 79% at $24.50 in premarket trading. The company was valued at just above $823 million at Friday's close.

Microsoft shares rose 0.7% to $32.19.