Report: Microsoft to Make Bid for Nook

After months of speculation that Microsoft would or should acquire the digital content and device business owned and operated by Nook Media, it may finally be happening.

According to documents obtained by TechCrunch, Microsoft is offering to pay $1 billion for Nook and will discontinue the Nook tablet business by the end of 2014. The acquisition would give Microsoft control of the device and content business but not the college bookstore business, according to the documents. Should the deal go through, the new Nook strategy would be to distribute and sell content through apps on third-party devices rather than through Nook devices.

In early trading on Wall Street, Barnes & Noble shares are up nearly 25% on the news. Shares of Microsoft are basically flat.

Barnes & Noble told Digital Book World that it has no comment on the report.

It was rumored in February that Barnes & Noble was considering discontinuing the Nook business amid an overall rethinking of its digital strategy following a disappointing holiday quarter when it failed to increase the number of tablets it sold compared to previous quarters while business was booming for its competition.

Meanwhile, also in February, Barnes & Noble founder and chairman Len Riggio made public his intention to purchase the Barnes & Noble chain of retail stores, divorcing it from the money-losing Nook division.

The development has occurred with the backdrop of Microsoft’s investment in Nook in the spring of 2012: $605 million over five years to help Nook compete with Amazon and expand internationally, giving Microsoft a 17.6% stake in the new company, Nook Media. The investment valued Nook Media (both the Nook device and content business and the Barnes & Noble chain of more than 600 college bookstores) at $1.7 billion. In December, Penguin parent Pearson invested $90 million in Nook Media for a 5% stake.


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