Microsoft is to a invest a total of $300 million in Barnes & Noble's Nook business, earning a 17.6 percent stake in a subsidiary temporarily dubbed 'Newco'.
The "strategic partnership", which will give Microsoft a major stake in the eReader business, also guarantees the appearance of a Nook application for Windows 8 when the platform launches later this year.
Cranny division suffers
The formation of Newco and our relationship with Microsoft are important parts of our strategy to capitalise 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," said Barnes & Noble CEO William Lynch.
"Microsoft's investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business."
Such has been the strong performance of Barnes & Noble's Nook division to date that Barnes & Noble has reportedly been reviewing whether to spin off the business into a separate company for months.
While this possibility is still being considered, the company claims there is still "no assurance" that the review will result in a complete separation.
Reading the market
For Microsoft's part, president Andy Lees said this is an important market for his company to have a hand in.
"The shift to digital is putting the worlds libraries and newsstands in the palm of every persons 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.
"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 new subsidiary brings together Barnes & Noble's digital and college businesses, awith Microsoft's $300 million investment valuing the new company at $1.7 billion.
As part of the deal, Microsoft and Barnes & Noble have also settled a patent dispute which Microsoft brought against the company in 2011.
[source: Barnes & Noble]
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