Barnes & Noble to Spin Off College Business As Separate, Public Company

Publishers Lunch

Barnes & Noble filed a registration statement with the SEC to separate BN College into a separate, publicly-traded company, which will operate as Barnes & Noble Education Inc. They say "the separation is intended to be a tax-free distribution to Barnes & Noble shareholders and is anticipated to be completed by the end of August 2015." Investors welcomed the news, with the stock rising 7 percent to roughly $26 a share in early morning trading, the highest it has been since 2009.

The company politely admits that combining the once private BN College with the BN retail stores and declining Nook operation was a mistake: "Barnes & Noble believes that the separation will allow each business to optimize its strategic opportunities. As more focused companies with differing potential growth profiles, capital needs and market dynamics, each company will benefit from strategic clarity and separate management and Board focus. The separation will also allow investors to assess each business more clearly as a stand-alone company."

The planned spin-off leaves Nook as part of the trade retail business, at least until the company finds another solution. And some investors interpret that as meaning Nook is no longer fit for sale, and will be absorbed back as a small, ongoing part of the retail business. (BN.com's long delayed, revamped web site is due to be unveiled next month, some publishers tell us, though the company has not announced anything yet.) BN Education is pitched as a "pure-play public company with more flexibility to pursue strategic opportunities in the growing educational services markets." The "proposed aggregate offering price," which is an estimate for filing fee purposes only, is $775 million.