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Microsoft (NASDAQ: MSFT ) gave shares of Barnes & Noble (NYSE: BKS ) a much-needed lift on Thursday, after news surfaced that the tech giant could buy the bookstore chain's Nook business. Shares of Barnes & Noble climbed 23% on the news. According to TechCrunch, Microsoft could pay as much as $1 billion to acquire the division of Barnes & Noble responsible for making e-readers and tablet devices.
TechCrunch speculates that a potential deal would not include Nook Media's college bookstore chain. Allegedly, Nook Media also plans to drop Android-based tables from its selection by the end of fiscal 2014, and migrate the Nook store onto Windows 8 and other third-party platforms.
What does this mean for Barnes & Noble?
This is great news for current Barnes & Noble shareholders. Nook Media's revenue for the recent quarter dipped 26%, which left shareholders questioning the future of the business. However, a possible Microsoft buyout could mean big things for the stock. According to David Strasser of Janney Capital Markets, "If the rumor proves to be true, Barnes & Noble is worth between $25 and $35 a share."
Barnes & Noble stock was trading around $20 a share at the time of this writing. A possible acquisition also makes sense for Microsoft, which currently holds a 17% stake in Nook Media. However, it remains to be seen how a possible buyout would affect Barnes & Noble's retail business. Investors should stay tuned for more details as the story develops.
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