Microsoft Joins Barnes & Noble Nook Party

We’ve written here previously about the possibility of embattled bookseller Barnes & Noble(BKS) spinning off its

Image representing Barnes & Noble as depicted ...

Nook business.  We’ve written elsewhere about the turnaround at Microsoft(MSFT). Today, both stories collide in an explosive way.

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