Shares in US book retailer Barnes & Noble closed more than 24 per cent higher in New York yesterday following a report that Microsoft is to buy the digital assets of Nook Media, its ebook and tablet business, for $1bn (£650m).
Rumours of the buyout proposal emerged yesterday when TechCrunch reported that it had seen documents based on company filings and management discussions detailing the plans.
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Microsoft already owns 17 per cent of Nook, having invested $300m (£195m) in 2012. Since then Nook has been developing content for Windows 8. However, on May 3rd Barnes & Noble announced that it had struck a deal to include Google Play on its tablets, allowing users to access the full range of Google's applications and services including Gmail and Netflix and also Amazon's Kindle app.
According to TechCrunch, Nook Media plans to bow out of its tablet business at the end of financial year 2014 in favour of distributing its content via apps on third-party devices. Currently the Nook app is available on every major platform, including Android, iOS and Windows.
If the buyout rumours turn out to be true, it could be that Microsoft's motive in buying Nook is to deny its rival Google a new platform for its products, either by moving to restrict the the Nook platform to Windows and the firm's own services, or by killing it altogether.
If it were to directly co-opt Nook's hardware, Microsoft could compete quickly with Amazon's Kindle ereaders and Kindle Fire tablets, as well as Google's Nexus 7 and other low-cost tablets, an area where its own Surface RT tablet has been widely seen to have failed.
Nook's Android-based tablets and ereaders have sold poorly, forcing a recent price cut. According to IDC its ebooks have only a two per cent market share.
Nook Media reported an operating loss of $190.9m over the last three quarters as it has strived to compete in the tablet market with Apple, Amazon and Google.
