Shares of Barnes & Noble Inc. (NYSE: BKS), a content, commerce and technology company providing customers access to books, magazines, newspapers and other content across its multi-channel distribution platform, are surging today after technology giant Microsoft Corporation (NASDAQ: MSFT) said that it will make a $300 million investment in the company’s Nook e-reader.
BKS shares rose to a new 52-week high of $26 today, and at last check, the stock was trading 60.82% higher at $22 on above average volume of 24.99 million.
The $300 million investment will allow MSFT to gain a foothold in the fast-growing e-books market. BKS, meanwhile, will get more firepower to compete against Amazon.com’s (NASDAQ: AMZN) Kindle device.
The investment from MSFT comes as the software maker looks to generate buzz around its Windows 8 operating system. The new tablet-friendly operating system is expected to be available in October this year.
The deal values Barnes & Noble’s Nook and textbook business at $1.7 billion. Speaking to Reuters, Colin Gillis, analyst at BGC Partners, said that this is not a financial investment, it is a strategic investment to strengthen Windows 8 as a platform for tablets and e-reading.
The deal provides Barnes & Noble with much needed capital and also a way to enter the e-books market outside the U.S.
BKS’ Nook and textbook businesses will become a new company, which will be run by Barnes & Noble. MSFT will take a 17.6% in the new company.
William Lynch, CEO of Barnes & Noble, said that the formation of the new company and the relationship with Microsoft are important parts of BKS’ strategy to capitalize on the rapid growth of the Nook business and to solidify its position as a leader in the exploding market for digital content in the consumer and education segments.
Andy Lees, President at Microsoft, said that the shift to digital is putting the world’s libraries and newsstands in the palm of every person’s hand and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content.