Microsoft (NASDAQ:MSFT) and Barnes & Noble (NYSE:BKS) are reportedly exploring options for a new venture which will include Barnes & Noble digital unit, the business operating its Nook device.
The partnership "will build upon the history of strong innovation in digital reading technologies from both companies."
The new subsidiary, referred to in the release as "Newco", will merge 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 a 17.6% equity stake.
Barnes and Noble will own about 82.4% of the new subsidiary, which will have an ongoing relationship with the company's retail stores.
Because of this news, the bookseller's stock is up over 75% in early trading, up over $10 to $24.05.