Barnes & Noble bookstore chain lures publisher Pearson with its Nook e-reader unit
By Bloomberg News
Published: Saturday, Dec. 29, 2012, 12:01 a.m.
Pearson Plc agreed to buy a 5 percent stake in the Nook e-reader unit of struggling bookstore chain Barnes & Noble Inc., joining Microsoft Inc. as a backer of the business.
Barnes & Noble shares rose the most in almost three weeks, even after the New York-based company said holiday sales were below expectations and the Nook unit won't meet its projection for fiscal 2013.
Publisher Pearson's investment values Nook at $1.79 billion, about twice Barnes & Noble's market capitalization.
“This is a reaffirmation of the valuation that no one believed with Microsoft in this Nook media business,” said David Strasser, an analyst at Janney Montgomery Scott LLC in New York. “It's mixed news today; it's massive news for the next five years or 10 years for Barnes & Noble.”
Barnes & Noble is getting a second large investor for the Nook business, which includes digital and college-book businesses, after Microsoft's April investment valued the division at about $1.7 billion.
The bookstore chain has been losing money as it develops and markets the Nook to take advantage of a growing preference for digital books.
The company's shares rose 4.3 percent to $14.97 at the close in New York, for their biggest gain since Dec. 10. Barnes & Noble, in which John Malone's Liberty Media Corp. has a minority investment, has a market capitalization of $896.7 million.
Pearson, the London-based owner of a U.S. education publishing business and Penguin Books, is spending $89.5 million in cash for the Nook stake, according to a statement. After the transaction, Barnes & Noble will own 78.2 percent of the Nook unit, and Microsoft will hold 16.8 percent.
Pearson will have the option to purchase as much as an additional 5 percent, according to the statement.
In April, Microsoft invested $300 million in a new subsidiary that combined Barnes & Noble's Nook and college businesses.
Barnes & Noble's retail operations, struggling from a declining demand for books, posted a drop in sales last quarter. The company said in a regulatory filing that it will announce full holiday sales results on Jan. 3.
The disappointing holiday outlook is part of a general weakness in holiday sales, Strasser said.
“We're just plateauing on digital,” he said. “A lot of people just like books.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- PNC plans to do away with tellers
- Consol acquires drilling rights from Dominion
- Chobani to make Super Bowl ad debut
- Lululemon to make changes in top brass
- Born in Pittsburgh, US Airways departure is a bittersweet one
- Olive Garden challenges competitors with 6-ounce burger
- Education Management Corp. suit settled for $3.4 million
- Cecil-based Rice Energy to go public
- With new composure, Nasdaq marches toward its dot-com peak
- Barra breaks GM glass ceiling
- Nestle cuts ties with farm over dairy cow abuse