Microsoft Invests $300 Million in Upcoming Barnes & Noble NOOK Spinoff
Dubbed NewCo, subsidiary will combine College, digital B&N businesses.
After announcing plans to possibly spin off its NOOK business in January, Barnes & Noble enters into a partnership with Microsoft. The tech company invested $300 million in the new subsidiary (currently under the working title NewCo), a post-money valuation of $1.7 billion, equating to a 17.6 percent equity stake. Barnes & Noble retains an 82.4 percent ownership of the new subsidiary.
The partnership will “accelerate the transition to e-reading, which is revolutionizing the way people, consume, create, share and enjoy digital content,” according to a company press statement. NewCo will combine Barnes & Nobles’ digital and College businesses, though there is no official plan to completely spin off the business from the parent corporation quite yet, “The company intends to explore all alternatives for how a strategic separation of NewCo may occur. There can be no assurance that the review will result in a strategic separation or the creation of a stand-alone public company, and there is no set timetable for this review.”
The company also stated it will not comment further regarding the review “unless and until a decision is made.”
One result of the deal is NOOK access for Windows 8 users in the form of an app. William Lynch, CEO of Barnes & Noble, says of the partnership, ““The formation of NewCo and our relationship with Microsoft are important parts of our strategy to capitalize on the rapid growth of the NOOK business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments.”
B&N is counting its College business as an important factor in NewCo, “NOOK Study software will provide students and educators the preeminent technology platform for the distribution and management of digital education materials in the market.”
This partnership follows the end of an ongoing patent dispute between the companies, as Microsoft previously claimed the use of Android on the NOOK violated its patents. A resolution has since been reached, “Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and NewCo will have a royalty-bearing license under Microsoft’s patents for its NOOK e-reader and tablet products. This paves the way for both companies to collaborate and reach a broader set of customers.”
Barnes & Noble did not immediately return request for comment on this news.