Microsoft invests $300 million in Barnes & Noble’s Nook e-books

LONDON, UK – Software giant Microsoft has invested $300 million in Barnes & Noble’s Nook e-book and college textbook business, sending the US bookseller’s stock soaring to a three-year high on Monday.

According to The Wall Street Journal, Microsoft will have a 17.6 percent stake in an as-yet unnamed new subsidiary for the businesses, in a transaction that values them at $1.7 billion.

Barnes & Nobel will own the rest. The bookseller has yet to indicate whether it will float the new company.

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As part of the move, a Nook application will be included in Microsoft’s new Windows 8 operating system, which is scheduled to have a release preview in early June. Computers and tablet devices with the system are expected to go on sale later this year.

Shares in Barnes & Noble almost doubled on the news, jumping $10.41, or 76 percent, to $24.09 in morning trading, the Associated Press reports. The opening price of $26 was a three-year high, while Microsoft’s stock rose 2 cents to $32.

According to the BBC, the Nook e-reader was released in 2009 as a competitor to Amazon’s Kindle device, allowing users to purchase, download and read electronic versions of books and magazines.

Some industry commentators believe publishers will be “terrified” that the deal represents a step towards a digital-only book distribution model. Tim Coates, managing director of Bilbary, an e-book content provider, told the BBC:

“This deal with Microsoft could be the saviour of its digital division but won’t help the bricks and mortar business. In fact it could accelerate its decline.”

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