Microsoft Invests $300M into a New Subsidiary of Barnes & Noble
In a press release published over at their website, Barnes & Noble announced a new partnership with Microsoft on a new venture that aims to give the company a stronger foothold in the e-book market. Microsoft is investing $300 million into the partnership in exchange for a 17.6% equity stake. The partnership, which will retain 82.4% ownership to Barnes & Noble, is viewed as strategic by the two companies, as it is expected to pick up the pace of e-reading in a market that is presently dominated by Amazon and Apple.
The new subsidiary
Barnes & Noble is yet to decide on the partnership name, although the new affiliation is referred to in the press release as Newco. Among the inclusions of this new subsidiary are B&N’s Nook products and its College business, which feature an application for Windows 8 and the Nook Study software, respectively. The Nook application for Windows 8 aims to further the market reach of Barnes & Noble, specifically in the digital reading sector. The Nook study software, on the other hand, targets students, educators and the wider digital education market.
The establishment of Newco and the partnership with Microsoft are just a few of the strategic efforts being undertaken by the company, according to CEO William Lynch of Barnes & Noble. These are aimed at fully utilizing the advantages presented by Nook’s accelerating growth in the market. The joint venture is also seen as a means at business expansion, allowing Barnes & Noble and Microsoft to target millions of users globally. Plans on the formation of Newco were first announced on January 5, wherein Barnes & Noble expressed their plans at establishing its digital business separately, with its primary aim on shareholder value maximization.
Microsoft is also optimistic about the partnership, as President Andy Lees has stated in the press release that the digital shift has influenced reading and interacting in tremendous ways, and that a “revolution in reading” has already begun.