The two companies will create a joint venture to which Barnes & Noble will contribute its Digital and College businesses, and to which Microsoft will contribute $300 million for a 17.6% stake, implying a $1.7 billion valuation. Considering that Barnes & Noble had a closing market cap on Friday for its entire business of under $800 million, this deal is a game changer for the company, which has nearly doubled in premarket trading.
It is unclear what Barnes & Noble will eventually do with its 82.4% stake in the joint venture, but a spin off remains a possibility. In the meantime, this certainly takes a great deal of pressure off the company, and lengthens the runway for the company’s still nascent digital efforts.
Disclosure: The author holds no position in any stock mentioned
- Microsoft invests $300m into Barnes & Noble subsidiary (slashgear.com)
- Barnes and Noble and Microsoft ‘Nook up’ for digital joint venture (9to5mac.com)
- Microsoft And Barnes & Noble Announce Partnership For Ebooks (fastcompany.com)
- B&N, Microsoft team up on Nook, college businesses (hosted.ap.org)
- Barnes & Noble to spin off digital Nook business, Microsoft will invest $300 million into it (theverge.com)