Barnes & Noble announced before the opening of the stock market Wednesday that it intends to split off its Nook Media division from the retail side, creating two separate, publicly traded companies. Shares rose over 10 percent in early morning trading on the news, up to roughly $22.5 a share. The seeds for such a spin-off were laid in the initial creation of Nook Media LLC (which includes details on how BN stores would display and sell Nook devices follow a possible separation). BN hopes to take the steps necessary to complete the separation by the end of March 2015, and has retained Guggenheim Securities as financial advisors and Cravath, Swaine & Moore as legal counsel.
CEO Michael Huseby said in the press release that the company believes "we are now in a better position to begin in earnest those steps necessary to accomplish a separation of Nook Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and Nook Media businesses will continue to have long-term, successful business relationships with each other after separation."
Right now Nook Media LLC comprises both the shrinking Nook business (pre-elimination sales of $506 million, and an EBITDA loss of $218 million) and the stable Barnes & Noble College business ($1.748 billion, and positive EBITDA of $114.5 million). Currently, Nook's biggest asset is the remaining promised payments from Microsoft. The software company owes Nook Media approximately $90 million over the next year and half as nonrefundable advances against Nook's share of digital content purchased by Windows 8, and somewhere between $75 million to $100 million payable over the next three and half years towards "assisting in acquiring local digital reading content and technology development."