Barnes & Noble and Microsoft partner in a $300 million deal to promote Digital Reading technologies

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Barnes & Noble Inc. today announced that it has signed a new deal with technology giant Microsoft to promote digital reading technologies and accelerate the transition to e-reading, which is revolutionizing the way people consume, create, and share content online.

The partnership will see the two companies establishing a new subsidiary called Newco, with Microsoft making a $300 million investment in Newco in exchange for 17.6% equity stake, and Barnes & Noble owning approximately 82.4% of the new subsidiary.

Through the newly formed Newco, Barnes & Noble’s NOOK Study software will provide students and educators with the technology platform for the distribution and management of digital education materials in the market. The NOOK application for Windows 8, will extend Barnes & Noble’s digital bookstore, that includes e-Books, magazines and newspapers to hundreds of millions of Windows customers in the U.S. and other parts of the world.

“The formation of Newco and our relationship with Microsoft are important parts of our strategy to capitalize on the rapid growth of the NOOK business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments. Microsoft’s investment in Newco, 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,” said William Lynch, CEO of Barnes & Noble.

“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. Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re at the cusp of a revolution in reading,” added Andy Lees, President at Microsoft.

With this new partnership, Barnes & Noble and Microsoft settle their patent disputes, and going ahead, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents for its NOOK eReader and Tablet products.

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