Barnes & Noble Inc. (NYSE: BKS) and Microsoft (NASDAQ: MSFT) today
announced the formation of a strategic partnership in a new Barnes &
Noble subsidiary, which will build upon the history of strong innovation
in digital reading technologies from both companies. The partnership
will accelerate the transition to e-reading, which is revolutionizing
the way people consume, create, share and enjoy digital content.
The new subsidiary, referred to in this release as Newco, will bring
together the digital and College businesses of Barnes & Noble. Microsoft
will make a $300 million investment in Newco at a post-money valuation
of $1.7 billion in exchange for an approximately 17.6% equity stake.
Barnes & Noble will own approximately 82.4% of the new subsidiary, which
will have an ongoing relationship with the company’s retail stores.
Barnes & Noble has not yet decided on the name of Newco.
One of the first benefits for customers will be a NOOK application for
Windows 8, which will extend the reach of Barnes & Noble’s digital
bookstore by providing one of the world’s largest digital catalogues of
e-Books, magazines and newspapers to hundreds of millions of Windows
customers in the U.S. and internationally.
The inclusion of Barnes & Noble’s College business is an important
component of Newco’s strategic vision. Through the newly formed Newco,
Barnes & Noble’s industry leading NOOK Study software will provide
students and educators the preeminent technology platform for the
distribution and management of digital education materials in the market.
“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,” said
William Lynch, CEO of Barnes & Noble. “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.”
“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,” said Andy Lees, President at Microsoft. “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 on the cusp of a revolution in reading.”
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.
NewCo
On January 5, Barnes & Noble announced that it was exploring the
strategic separation of its digital business in order to maximize
shareholder value. Barnes & Noble is actively engaged in the formation
of Newco, which will include Barnes & Noble’s digital and College
businesses. The company intends to explore all alternatives for how a
strategic separation of Newco may occur. There can be no assurance that
the review will result in a strategic separation or the creation of a
stand-alone public company, and there is no set timetable for this
review. Barnes & Noble does not intend to comment further regarding the
review unless and until a decision is made.
Additional information will be contained in a Current Report on Form 8-K
to be filed by Barnes & Noble.
Barnes & Noble and Microsoft will host an investor call and webcast
beginning at 8:30 A.M. ET on Monday, April 30, 2012. To join the
webcast, please visit: www.barnesandnobleinc.com/webcasts.
About Barnes & Noble, Inc.
Barnes & Noble, Inc. (NYSE:BKS), the world's largest bookseller and a
Fortune 500 company, operates 691 bookstores in 50 states. Barnes &
Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes &
Noble, also operates 641 college bookstores serving over 4.6 million
students and faculty members at colleges and universities across the
United States. Barnes & Noble conducts its online business through
BN.com (www.bn.com),
one of the Web's largest e-commerce sites, which also features more than
two million titles in its NOOK Bookstore™ (www.bn.com/ebooks).
Through Barnes & Noble’s NOOK™ eReading product offering, customers can
buy and read digital books and content on the widest range of platforms,
including NOOK devices, partner company products, and the most popular
mobile and computing devices using free NOOK software. Barnes & Noble is
proud to be named a J.D. Power and Associated 2012 Customer Service
Champion and is only one of 50 U.S. companies so named.
General information on Barnes & Noble, Inc. can be obtained via the
Internet by visiting the company's corporate website: www.barnesandnobleinc.com.
NOOK®, NOOK Tablet™, NOOK Simple Touch with
GlowLight™ , NOOK Simple Touch ™, NOOK Color™,
Reader’s Tablet™, Best-Text™, NOOK Store™,
NOOK Bookstore™,NOOK Magazines™, VividView™,
NOOK Newspapers™, FREE NOOK Reading Apps™, NOOK
Kids™,NOOK Digital Shop™, Read In Store™,More
In Store™,LendMe®,NOOK Library™,NOOK
Books en español™, NOOK Study™, Lifetime Library™
and Read What You Love. Anywhere You Like™are trademarks of
Barnes & Noble, Inc. Other trademarks referenced in this release are the
property of their respective owners.
Follow Barnes & Noble on Twitter (www.bn.com/twitter),
Facebook (http://www.facebook.com/barnesandnoble)
and YouTube (http://www.youtube.com/user/bnstudio).
About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in
software, services and solutions that help people and businesses realize
their full potential.
FORWARD LOOKING STATEMENTS
This press release contains certain forward-looking statements (within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended) and
information that are based on the beliefs of the management of Microsoft
or Barnes & Noble, as applicable, as well as assumptions made by and
information currently available to such management. When used in this
press release, the words "anticipate," "believe," "estimate," "expect,"
"intend," "plan," "will" and similar expressions, as they relate to
Barnes & Noble, Newco or Microsoft or the management of Barnes & Noble
or Microsoft, identify forward-looking statements.
Such statements reflect the current views of the relevant entities with
respect to future events, the outcome of which is subject to certain
risks, including, among others, the risk that the transactions
contemplated by this press release, including with respect to any
spin-off, split-off or other disposition by Barnes & Noble of its
interest in Newco, are not able to be implemented on the terms described
or at all, the risk that the transactions do not achieve the expected
benefits for the parties including the risk that Newco’s applications
are not commercially successful or that the expected distribution of
those applications is not achieved, the risk that the separation of the
digital and college businesses or any subsequent spin-off, split-off or
other disposition by Barnes & Noble of its interest in Newco results in
adverse impacts on Barnes & Noble or Newco (including as a result of
termination of agreements and other adverse impacts), the potential
impact on Barnes & Noble’s retail business of the separation, the risk
that the international expansion contemplated by the relationship is not
successful, the potential tax consequences for Barnes & Noble and its
shareholders of a subsequent spin-off, split-off or other disposition by
Barnes & Noble of its interest in Newco and the risk that Newco is not
able to perform its obligations under the commercial agreement,
including with respect to the development of applications and
international expansion, and the consequences thereof and general risks
related to the businesses that will become part of Newco, including
those risks discussed in detail in Item 1A, "Risk Factors," in Barnes &
Noble's Annual Report on Form 10-K and Form 10-K/A, and in Barnes &
Noble's other filings made hereafter from time to time with the SEC.
Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described as anticipated,
believed, estimated, expected, intended or planned. Subsequent written
and oral forward-looking statements attributable to Barnes & Noble or
persons acting on its behalf are expressly qualified in their entirety
by the cautionary statements in this paragraph. The parties undertake no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise after
the date of this communication.
