The NOOK Media subsidiary of B&N has announced that the learning company Pearson will invest $89.5 million in cash in NOOK at a post-money valuation of approximately $1.789 billion in exchange for preferred membership interests representing a 5% equity stake. B&N will own, after the transaction, 78.2% of NOOK Media and Microsoft will own 16.8%. Pearson has the option to purchase up to an additional 5% of the company.
Will Ethridge, Chief Executive Officer of Pearson North America, said, “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.”
This is great news for readers. Competition is essential to the continued healthy growth of the ebook community, and the stronger that B&N gets, the better for readers.
However, right after I posted this, B&N announced: “Based on preliminary sales results to date in the holiday period and sales trends, the Company expects its holiday sales results will be below expectations and that the NOOK business will not meet the Company’s prior projection for fiscal year 2013.”