US computer giant Microsoft will make a $300 million investment in a new Barnes & Noble subsidiary to combine the bookseller’s digital reading capabilities, including its Nook tablet, and its college businesses.
Shares of Barnes & Noble soared 92% to $26.3 in premarket trading. The company was valued at just above $823 million at Friday’s close.
The investment will give Microsoft a 17.6% stake in the as-yet unnamed unit that “will accelerate the transition to e-reading, which is revolutionising the way people consume, create, share and enjoy digital content,” the companies said in a statement on Monday.
Both have settled their patent litigation, the statement added.
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-book sales they generate as readers move away from traditional books.
Barnes & Noble commands about 27% of the US market for e-books and e-readers.
In January, Barnes & Noble — whose market value has plummeted in recent years — had announced plans to spin off its digital business to maximise value for its shareholders.
“The shift to digital is putting the world’s libraries and newsstands in the palm of every person’s hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content," said Andy Lees, president, Microsoft.
The company’s input would “accelerate e-reading innovation across a broad range of Windows devices,” said Lees.
It was not decided whether the separation of the new unit will involve a new stand-alone company.
In February Barnes & Noble unveiled a new version of its Nook tablet, with the same $199 price tag as Amazon’s Kindle Fire.
“It gives them a much larger partner with deeper pockets, it gives them increased reach,” said Morningstar analyst Peter Wahlstrom. “In the last two years they’ve had their backs against the wall.”
Reuters & AFP