Microsoft invests $300 million in new Barnes & Noble subsidiary

Microsoft will invest US$300 million in a new Barnes & Noble subsidiary, which will include the digital Nook and College businesses of Barnes & Noble, the companies said in a joint statement on Monday.

The formation of the new subsidiary and the relationship with Microsoftare important parts of Barnes & Noble’s strategy to try tocapitalize on the growth of the Nook business, it said.

The investment will give Microsoft a 17.6 per cent equitystake, whichvalues the unnamed subsidiary at $1.7 billion, according to thestatement. Barnes & Noble will own the rest of the unit, whichwill still work with the company’s retail stores, it said.

As part of the deal, Barnes & Noble and Microsoft have alsosettled their patent litigation, and moving forward, Barnes &Noble and the new subsidiary will pay Microsoft royalties for its Nooke-reader and tablet products.

Microsoft filed legal action against Barnes & Noble in Marchlast year.

Barnes & Noble now intends to explore all alternatives for howa strategic separation of the subsidiary may occur, but there is no settimetable for when the review will be finished, it said.

One of the first results for users will be a Nook application forWindows 8. The app will extend thereach of Barnes & Noble’sdigital bookstore to devices based on Microsoft’s upcoming Windowsoperating system, which will be used on both PCs and tablets. There isno date for when the application will arrive.

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Jim Love, Chief Content Officer, IT World Canada

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