The strategic investment deal will see Pearson gain a 5 percent stake in the new firm, which operates all of Barnes & Noble’s digital businesses, including its NOOK e-reader and tablets, digital bookstore and its 674 college bookstores across America.
The investment thus values NOOK Media at just south of $1.8 billion.
Subject to certain conditions, Pearson will earn the option to purchase up to an additional 5 percent ownership in NOOK Media.
What you won’t find in the press release announcing the Pearson investment, but will find in the related 8-K document filed with the SEC today: Barnes & Noble expects holiday 2012 sales results to come in below expectations, and that the Nook business “will not meet the company’s prior projection for FY [Fiscal Year] 2013.”
Microsoft had initially invested $300 million in NOOK Media – then still labeled ‘NewCo’ – in April 2012, acquiring a 17.6 percent stake.
When the Pearson transaction closes, Barnes & Noble will own approximately 78.2 percent of NOOK Media, while Microsoft will own approximately 16.8 percent.
Will Ethridge, CEO of Pearson North America, commented:
“Pearson and Barnes & Noble have been valued partners for decades, and in recent years both have invested heavily and imaginatively to provide engaging and effective digital reading and learning experiences. This new agreement extends our partnership and deepens our commitment to provide better, easier experiences for our customers.
With this investment we have entered into a commercial agreement with NOOK Media that will allow our two companies to work closely together in order to create a more seamless and effective experience for students.
It is another example of our strategy of making our content and services broadly available to students and faculty through a wide range of distribution partners.”
Pearson’s business can be split into three main groups: Education, which includes the company’s digital learning and education publishing offerings, Financial Times Group and consumer publishing unit Penguin Group.
Pearson also holds a 50% stake in the Economist Group.