In an effort to clear the way for an upcoming separation of its College bookstore and Nook business from its retail business, Barnes & Noble bought out Microsoft’s from their joint venture for $120 million in cash and common stock.
Announced in April 2012, NewCo was planned as a spinoff of Barnes & Noble’s digital and college business and fueled by a $300 million initial investment from Microsoft, representing 17.6% of the joint venture and setting the valuation north of $1.7 billion. Microsoft also agreed to invest another $300 million through 2017.
The separation is planned for August 2015 and Barnes & Noble hopes that the clearer structures will attract new investors for its struggling digital business. Pearson, which acquired a 5% stake in Nook Media in 2013, has also received a buy-back offer under the same conditions as Microsoft.
Both companies state changed circumstances for ending the partnership. For Barnes & Noble the Nook business did not turn into a strong sales channel as initially hoped. In the last quarter, Nook sales fell 41%, digital sales like ebooks 21%. Barnes & Noble also announced a partnership with Samsung to sell color tablets under the Nook brand while laying off most of its own tech staff.
For Microsoft the Nook partnership does not seem to fit into the new focus on its core businesses, either. Signed under former CEO Steve Ballmer, the partnership falls in a time before the acquisition of Nokia and the launch of own hardware like the Surface tablet.