Microsoft and Barnes & Noble have have come to an agreement on terms to launch a subsidiary called Nook Media LLC.
Barnes & Noble and Microsoft said on Thursday that they have finally agreed to terms on a previously-announced Barnes & Noble subsidiary now called Nook Media LLC. If approved, the book retailer will control the majority share (82.4-percent) and Microsoft will get a 17.6-percent equity share in exchange for injecting $300 million into Nook Media LLC at a post-money valuation of $1.7 billion.
The new Nook subsidiary comprises the Nook Digital and College businesses, and will continue to have a very close and mutually beneficial relationship with Barnes & Noble’s retail stores. This new joint venture will allow the companies to "advance world-class digital reading experiences to the hundreds of millions of customers they jointly serve."
The first order of business, according to Andy Lees, President at Microsoft, will be to create a Nook app for Windows 8 in time for the operating system's launch. He described the subsidiary as a "leader in developing the next generation of digital reading," and is excited about the product roadmap and expansion into markets around the world.
This comment indicates that Microsoft may be looking to lean on Barnes & Noble as its primary source for ebooks, magazines, college textbooks and more (Microsoft Books, Powered by Nook?). It's the one component Microsoft doesn't currently offer, and will be a key feature once Windows 8 tablets hit the market. As Lees pointed out, Amazon's arch enemy recently had several successful launches in the UK – more will surely come.
"As demand for digital content continues to increase, we are focused on bringing ground-breaking reading and learning content and technologies to more people in more formats than ever before, including the imminent launch of our exceptional Nook reading application for Windows 8,” said William Lynch, CEO of Barnes & Noble. “We look forward to working closely with our new partner Microsoft to add value to their innovative new platform by bringing great reading experiences and one of the world’s preeminent digital bookstores to millions of Windows 8 users."
The strategic partnership to form a subsidiary was originally announced back in April. The two companies specifically stated that through Barnes & Noble's College business now included in the new subsidiary (dubbed Newco at the time), "Nook Study software will provide students and educators the preeminent technology platform for the distribution and management of digital education materials in the market."
They also said the new partnership will "accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content."
“Microsoft’s investment in [Nook Media LLC], and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business," Lynch said in April.