A few months after Barnes & Noble announced it was looking to spin off its Nook business, Microsoft and B&N are forming a strategic partnership that combines Nook and the B&N college businesses into a new, still unnamed company (for now called Newco). Microsoft is making a $ 300 million investment in the new company “at a post-money valuation of $ 1.7 billion in exchange for an approximately 17.6% equity stake.” Barnes & Noble will own the remaining 82.4% of of the new subsidiary, “which will have an ongoing relationship with the company’s retail stores.”
Barnes & Noble “intends to explore all alternatives for how a strategic separation of Newco may occur,” the release says. B&N CEO William Lynch said in an interview in January that “whatever we do, we will continue to have a tight relationship between the Nook and [B&N stores] and the Nook will continue to be Barnes & Noble’s e-reader.”
The partnership with Microsoft “will allow us to significantly expand the business,” said B&N CEO William Lynch. Part of that expansion is a Nook app for Windows 8, “which will extend the reach of Barnes & Noble’s digital bookstore by providing one of the world’s largest digital catalogues of e-books, magazines and newspapers to hundreds of millions of Windows customers in the U.S. and internationally.”
Microsoft president Andy Lees said, “Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re on the cusp of a revolution in reading.”
The release notes that B&N and Microsoft settled their patent litigation and “Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents for its Nook e-reader and tablet products.”
Barnes & Noble and Microsoft are now holding an investor call to discuss the partnership and we’ll update this post soon.
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