Microsoft invests $300 million into Barnes and Noble partnership

Microsoft and Barnes and Noble announced today that Microsoft will be investing $300 million in a new Barnes and Noble subsidiary, dubbed “Newco” for the time being. The subsidiary will be focused around Barnes and Noble’s Nook e-reader and college business, and as a result of the investment, Microsoft will receive aб═17.6% stake in the partnership.

Barnes & Noble Inc. (NYSE: BKS) and Microsoft (NASDAQ: MSFT) today announced the formation of a strategic partnership in a new Barnes & Noble subsidiary, which will build upon the history of strong innovation in digital reading technologies from both companies. The partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content.

The new subsidiary, referred to in this release as Newco, will bring together the digital and College businesses of Barnes & Noble. Microsoft will make a $300 million investment in Newco at a post-money valuation of $1.7 billion in exchange for an approximately 17.6% equity stake. Barnes & Noble will own approximately 82.4% of the new subsidiary, which will have an ongoing relationship with the companyБ─≥s retail stores. Barnes & Noble has not yet decided on the name of Newco.