Barnes & Noble decides to end its Nook partnership with Microsoft

Microsoft Corp. ’s flirtation with Barnes & Noble Inc. has ended, clearing the way for the largest U.S. bookstore chain to get on with its plans to split itself into two separate public companies. Barnes & Noble said Thursday that it is buying out Microsoft’s 16.8% stake in Nook Media LLC for about $125 million in cash and common stock. Microsoft in 2012 agreed to invest $605 million in Barnes & Noble’s Nook digital device and e-book business and its college bookstore group. The investment included a $300 million equity stake plus additional investments through 2017. In return, Barnes & Noble committed to creating e-reading apps for new computers, phone and tablets powered by Microsoft’s Windows software. Wall Street analysts and investors wondered whether Microsoft would eventually make a larger commitment to Barnes & Noble, but that never materialized. In a statement Thursday, Microsoft said, “As the respective business strategies of each company evolved, we mutually agreed that it made sense to terminate the agreement.” Microsoft is taking a loss on its investment, but won’t have to make any further financial commitments. However, It will continue to have a connection to the Nook digital business; if that money-losing business is sold in the next three years, Microsoft is entitled to 22.7% of the proceeds.