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Microsoft and Barnes & Noble have entered into an agreement by which Microsoft will invest $300 million in Barnes & Noble’s new digital and college book business, thereby settling its patent battle with the book seller, contributing to the creation of a new subsidiary and taking a 17.6 percent share of that business.
The new Barnes & Noble subsidiary, which will build upon the history of innovation in digital reading technologies from both companies, has not been named and will be referred to as Newco. The partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content, the companies said.
The new subsidiary will bring together the digital and college businesses of Barnes & Noble. After Microsoft’s investment, Barnes & Noble will own approximately 82.4 percent of the new subsidiary, which will have an ongoing relationship with the company’s retail stores.
Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents for its NOOK eReader and Tablet products. This paves the way for both companies to collaborate and reach a broader set of customers. Microsoft filed a patent infringement lawsuit against Barnes & Noble last year.
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